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Saudi inflation continues downward trend to hit 2%

Man in supermarket considering food prices Shutterstock/Prostock Studio
Food and beverage prices rose just 0.4% after driving inflation for much of 2022
  • Down to 2% in August from 2.3%
  • Hit high of 3.4% in January
  • Housing costs continue to rise

Saudi Arabia’s annual inflation eased to 2 percent in August from 2.3 percent the previous month, continuing a downward trend since a high of 3.4 percent in January. 

The main driver of inflation during August was housing and an increase in rents of 10.8 percent, including 22.5 percent for apartments, the General Authority for Statistics said in its monthly release. 

In Riyadh, house prices have been increasing at an unprecedented rate, up 45-50 percent since January 2020 due to an influx of domestic migrants and expats to the capital.

The overall prices of housing, water, electricity, gas and other fuels rose by 9 percent, while food and beverages rose only 0.4 percent, though they were the leading driver for price increases for much of last year. 

Transport prices grew, while prices for clothing and footwear, and furnishings and household equipment decreased. 

Gulf states are seeing a softening in inflation rates in line with a global trend towards stabilisation after supply chain shocks caused by the Covid-19 pandemic and war in Ukraine. 

In one of the fastest-growing regions in the world, some analysts see local inflationary pressures picking up again later in the year. 

However, in a research note on Thursday, James Swanston, Middle East and North Africa economist at Capital Economics in London predicted that Saudi Arabia’s headline inflation rate will continue its downward trend over the remainder of this year, to 1.0-1.5 percent year on year, and remain around this rate into 2024.