Inflation – Price bubble spring leak

Inflation was the biggest economic story in the Middle East for 2008, before the global financial system almost completely self-destructed. While inflation was a global problem due to a sharp rise in oil and food prices, levels in the Middle East were exceptionally high. The GCC’s average inflation rate was estimated to be 11.5%, according to Global Research. Inflation exerted significant pressure on much of the region’s population and civil unrest occurred from the UAE to Egypt. The causes for these high levels were largely related to the same underlying issues fuelling global inflation, but in the region they were further exasperated by the dollar peg, strong domestic demand and supply bottlenecks, especially in the GCC. Not surprisingly, the debate over the pegging of currencies to the dollar re-ignited, especially in the GCC. The strong growth in both the GDP and the money supply in the GCC should have been