JEDDAH: Inflation in the Kingdom eased slightly to 10.4 percent last month, down from levels that had hit a 30-year high, but rising rental and food costs continued to pressure the Middle East’s largest economy.
The Economy and Planning Ministry said the country’s cost of living index was at 115 points on May 31 compared with 104.20 points a year earlier. “The rental index which includes rents, fuel and water soared 18.5 percent while food and beverage costs rose by 15.1 percent,” the Saudi Press Agency reported quoting the ministry’s statistics department.
Prices of other goods and services increased by 11.9 percent, health care 7.7 percent, home furniture 5.3 percent, education and recreation 1.9 percent and transport and communication 0.5 percent, the agency said.
Annual inflation in Saudi Arabia hit 10.5 percent in April this year, the highest in more than 30 years. As a result the government took a series of measures to curb inflation and rising prices of essential commodities.
Hamad Al-Sayari, governor of Saudi Arabian Monetary Agency (SAMA), has predicted the Kingdom’s inflation rate would come down by the second half of this year. “Unfortunately, the forces pushing inflation are still active. We expect that it will slow down in the second half of the year as a result of the slowdown of the global economy and impact on demand for commodities,” he said. With crude oil selling for prices above $140 a barrel, forces pushing inflation in Saudi Arabia include housing and rent, and they are taking time to ease, Al-Sayari said.
SAMA said last month it expected inflation in the Kingdom to keep rising through the current quarter.
Inflation is a key challenge in the Gulf region, where national currencies are pegged to the ailing US dollar.