Economy Saudi inflation ticks up to 3.4% in January as housing costs rise By Reuters February 16, 2023 REUTERS/Hanaa Habib Close to one out of five people living in developing countries in Mena is likely to be food insecure this year, says World Bank Saudi Arabia’s annual inflation inched up to 3.4 percent in January 2023 from 3.3 percent a month earlier as higher housing expenses continued to drive up living costs, government data showed. Housing, water, electricity, gas and other fuels – with a 25.5 percent weight of the consumer basket, the largest category – rose 6.6 percent from a year earlier. “Actual rents for housing increased by 7.7 percent in January 2023, reflecting the increase in rents for apartments of 19.3 percent,” the country’s General Authority for Statistics said. Food and beverage prices, which were the main driver of inflation during much of 2022, rose 4.2 percent from a year earlier. Compared with December, consumer prices rose 0.2 percent, the statistics agency said. With the exception of July 2020 to June 2021 – when inflation spiked following a tripling of the value-added tax rate – annual inflation is at its highest level since July 2016, according to Refinitiv data. “Inflation is now at or very close to its peak and we expect the headline rate to ease to 1.5-2.0 percent year-on-year by the end of this year,” Capital Economics said in a research note. “If anything, the risks to our inflation forecast lie to the downside if the long-mooted cut to the value-added tax (VAT) rate is implemented.” In April 2021, Saudi Arabia’s Crown Prince Mohammed bin Salman said tripling VAT to 15 percent was a temporary decision that would last between one and five years before being reduced to between five percent and 10 percent.
