Inflation across the Gulf Cooperation Council (GCC) countries remained broadly subdued in June and July 2026, even as oil and gas prices swung amid the ongoing US-Iran conflict, according to Kamco Invest’s latest GCC Inflation Update.
Regional central banks, including the UAE Central Bank, kept rates unchanged through the first seven months of 2026, continuing to track the US Federal Reserve, which held its benchmark rate steady in July at 3.5 to 3.75 per cent amid growing expectations of a hike at its September meeting.
The report warned that intermittent hostilities between the US and Iran risk fuelling a broader resurgence in global inflation, with the World Bank flagging potential disruption to Middle East fertiliser exports.
Kamco Invest projects UAE inflation at 2.5 per cent for full-year 2026, easing to 2.0 per cent in 2027, citing IMF forecasts.
The conflict has already disrupted roughly 30 per cent of global fertiliser shipments transiting the Strait of Hormuz, contributing to a rise in global food prices.
UAE
The UAE hiked petrol prices in June 2026 but reduced them in July as global crude oil prices eased.
Dubai’s Consumer Price Index rose 5.3 per cent year-on-year in July, easing from a 5.7 per cent peak in June but still remaining the highest reading among GCC economies, as the fallout from the US-Iran war pushed up fuel and imported food costs, according to Kamco Invest.
Dubai’s Transport index climbed 11.9 per cent year-on-year, driven largely by a 41.4 per cent surge in air passenger transport costs.
The Food and Beverages group rose 7.8 per cent year-on-year due to residual supply pressures, while Housing and Utilities increased 7 per cent, remaining a key contributor to household budgets. Restaurants and Hotels prices accelerated 4.5 per cent year-on-year. On a monthly basis, Dubai’s CPI rose a modest 0.1 per cent in July.
GCC states
Saudi Arabia’s annual inflation remained below the central bank’s 2 per cent benchmark, rising 1.8 per cent year-on-year in July, supported by a 4.2 per cent increase in actual rental prices and an 11.1 per cent rise in personal effects, driven by a 12 per cent surge in jewellery and watch prices.
Kuwait’s CPI increased 2.2 per cent year-on-year in June, led by a 5.6 per cent rise in food and beverage prices, while Qatar posted a matching 2.2 per cent year-on-year increase, driven by a 12.7 per cent jump in food and beverage costs.
Bahrain’s inflation rose 2.3 per cent in June, with transport costs climbing 10.6 per cent year-on-year.
Oman recorded the highest inflation in the GCC, with CPI up 3.2 per cent year-on-year in July, driven by a 7.3 per cent rise in food and non-alcoholic beverages and a 6.5 per cent increase in transportation costs.
Source: Khaleej Times