Kuwait's consumers experiencing more stability.

Almost everything about Kuwait and its economy has to do with oil. And because of 2006 oil price increases, Kuwait's economy is almost universally reported to be doing well.

One of the improving factors directly relating to the country's consumers is a moderating in the volatility of Kuwait's Purchasing Power Parity (PPP) per capita income. This statistic, as its name suggests, takes economic factors into account that impact on the purchasing power of a market's consumers allowing better comparisons among market economies. PPP per capita is a "derived" number-meaning that it is established by a formula as opposed to being based solely on market survey information.

The point is that some of the consumer dynamics of a market may be obscured by analysis of a "derived" statistic.

Nevertheless, the graph above does tell a compelling consumer story.

The period of the graph is from 1998 through a PPP per capita estimate-by the International Monetary Fund (IMF)-of what Kuwait's PPP per capita income is likely to be at the end of 2007. Notable is that volatility in PPP per capita income has moderated since 2004 and is expected to continue on a stable course through 2007.

The period from 1998 through 2007 encompasses two Gulf Wars and a fairly wild ride for oil prices. What the graph may indicate, especially since the moderating trend in PPP per capita income has persisted for four years, is that, first, Kuwait's economy may be better positioned to endure oil price shocks. This would normally introduce a measure of price stability, but that does not seem to be the case.

The IMF reports growth in the rate of inflation is increasing since 2004. The inflation growth rate in 2004 was 1.3 percent over 2003. In 2005 the rate of inflation grew 3.9 percent. In 2007 the IMF expects Kuwaiti inflation to grow 3.0 percent.

This, however, does not mean...

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