Kuwait's annual inflation rate eased to a 25-month low of 2.8 per cent in May and prices edged down slightly from the previous month, mainly because of cheaper food, state news agency Kuna reported yesterday.

Inflation has been slowing gradually. It hit 3.3pc in April, down from a peak of 5.4pc in May 2011.

Consumer prices fell 0.1pc month-on-month in May, compared to a 0.6pc drop in April.

"The low inflation reading is testament to a weak demand climate and anaemic credit growth," said Liz Martins, senior regional economist at HSBC, Dubai. "Even with the salary increases we have seen in recent months, we don't expect a major pick-up in the short to medium term."

Paul Gamble, head of research at Jadwa Investment, Riyadh, said there was very little inflationary pressure coming from abroad, while consumer and government spending were not increasing that much.

"In general, the political uncertainty has hindered project implementation, which has kept a lid on one aspect of inflation. June will be sluggish but then we have Ramadan coming up, so we will see its usual impact on food prices."