Cost of eating out in Saudi Arabia rises at fastest rate in five years

While the overall inflation rate was flat, the cost of eating out is on the rise in Saudi Arabia (Getty Images)
Updated 25 September 2018
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Cost of eating out in Saudi Arabia rises at fastest rate in five years

  • August data reveal sharp uptick in prices in hotel and restaurant sector
  • But price increases in other sectors slow leaving overall inflation rate flat

LONDON: The cost of eating out or enjoying a night’s stay at a hotel in Saudi Arabia increased at the fastest rate recorded in five years last month, according to government statistics.
August’s consumer price data show that restaurant and hotel inflation rose to a new high of 8.4 percent year-on-year in August from 7.6 percent year-on-year in July.
Slower price increases in other categories ensured the headline inflation rate for the Kingdom remained relatively flat, with inflation staying at 2.2 percent year-on-year in August, unchanged from the previous month.
Analysts forecast that the Kingdom’s inflation rate will likely pick up again towards the end of the year.
“We still expect it to rise a little over the rest of this year as underlying price pressures pick up,” said Jason Tuvey, senior emerging markets economist at Capital Economics, on Tuesday in a research note.
Inflation in Saudi Arabia peaked earlier this year at 3 percent following the introduction of the new value-added tax on certain goods and the government-imposed price hikes on the cost of energy at the start of 2018.
Consumer prices are expected to drop again in the new year as the impact of the VAT charge lessens, analysts predict.
“The upshot is that we expect that inflation will fall to around 1 percent year-on-year in January 2019,” said Tuvey in a note.
Food inflation - which represents 20 percent of the basket of goods and services used to calculate the growth rates in consumer prices - edged downwards in August to 6.6 percent year-on-year compared to 6.7 percent in July. 

The cost of food had jumped in July, with vegetables in particular becoming more expensive with inflation hitting 8.1 percent year-on-year compared to a decline of 0.8 percent year-on-year recorded in June.


UAE property developers’ earnings give Gulf markets a boost

Updated 17 February 2019
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UAE property developers’ earnings give Gulf markets a boost

  • Real estate sector gets confidence boost
  • DAMAC gains despite 87 pct drop in Q4 net profits

DUBAI: Most stock markets in the Middle East closed higher on Sunday, reflecting a rally in global stock markets on Friday, and were also boosted by better-than-expected company results, particularly in real estate.

The Abu Dhabi index gained 0.7 percent and the Dubai index 0.6 percent, as two of the largest property developers in the United Arab Emirates posted positive fourth-quarter financial results last week that beat market expectations.

“The market is starting to rebuild confidence in earnings as a driver for sentiment,” said Arqaam Capital in a research note. “Sentiment on the UAE was very weak in 2018, specifically for real estate, on concerns over oversupply risk, pricing pressure that is leading to extended payment plans, and a rental yield compression that is continuing to fall,” Arqaam said.

“But Q4 numbers provided evidence that a few developers have emerged as winners (Emaar Co’s, Aldar) out of market consolidation.” Emaar Properties, Dubai’s largest listed developer, reported a 27 percent rise in fourth-quarter profit.

The stock rose 2 percent on Sunday. DAMAC Properties closed up 0.8 percent, despite having reported a nearly 60 percent fall in full-year profit and an 87 percent drop in fourth-quarter net profits.

In Abu Dhabi, Aldar Properties gained 3.6 percent. Last week, the developer reported a rise in fourth-quarter earnings and higher dividends for 2018. In other sectors, Abu Dhabi Islamic Bank rose 0.5 percent after saying it had no merger and acquisition plans. This was in response to a Bloomberg report last week which said the bank was considering such options.

The Saudi index closed 0.4 percent down, in contrast to the rest of the region’s markets. Arab National Bank reported an increase in full- year net profit to 3.13 billion riyals ($834.62 million) from 3.03 billion riyals one year earlier.

The stock remained unchanged and this failed to give support to the banking sector. Alinma Bank < 1150.SE> and Al Rajhi Banking & Investment Corp. lost 0.3 percent and 0.6 percent, respectively.

In Egypt, where the main index gained 1.4 percent, Orascom Investment Holding, up 3.2 percent, was among the stocks attracting the highest trading volume. Shares in the company jumped last week after its chairman, Egyptian billionaire businessman Naguib Sawiris, said he saw possible investment opportunities in North Korea if a summit between its leader Kim Jong Un and US President Donald Trump later this month was successful.

SAUDI The index lost 0.4 pct to 8,592 points ARABIA DUBAI The index rose 0.6 pct to 2,550 points ABU DHABI The index rose 0.7 pct to 5,070 points QATAR The index gained 0.7 pct to 10,011 points EGYPT The index rose 1.4 pct to 15,199 points KUWAIT The index gainedd 0.1 pct to 5,427 points OMAN The index was down 0.8 pct at 4,077 points BAHRAIN

The index went up 0.6 pct to 1,381 points ($1 = 3.7502 riyals)