Despite the persistent geopolitical friction between the US and Iran, inflation across the Gulf Cooperation Council (GCC) remained largely contained throughout June and July 2026. According to the latest data from Kamco Invest, regional central banks have maintained a cautious stance, keeping interest rates steady in alignment with the US Federal Reserve’s current policy. While the ongoing conflict has introduced volatility into global energy and food markets—particularly affecting fertiliser shipments through the Strait of Hormuz—the impact on local economies has stayed relatively moderate. Analysts project that UAE inflation will settle at 2.5% for the year, with an expected decline to 2.0% in 2027.

At the individual country level, performance across the Gulf has been varied. Dubai experienced the highest inflation rate in the region at 5.3% in July, driven primarily by elevated costs in transport, housing, and imported food. In contrast, Saudi Arabia saw its inflation rise by a modest 1.8%, staying well under the central bank's 2% target, while countries like Kuwait and Qatar reported similar inflation figures of 2.2%. Oman currently faces the highest inflationary pressure in the bloc at 3.2%, largely due to rising food and transportation expenses. Despite these localized challenges, the region continues to demonstrate resilience as policymakers navigate global supply chain disruptions and shifting crude oil prices.