JEDDAH: Increases in food and housing costs pushed the Kingdom’s inflation to a 30-year high of 10.6 percent in June compared to 10.4 percent in May.
The cost of living index rose to 115.5 points on June 30 from 115 points in May, the Saudi Press Agency said, citing a report by the Ministry of Economy and Planning’s Central Department of Statistics.
The index was 104.4 points on June 30, 2007, according to data from the department.
Food and beverages costs went up 15.8 percent in June compared to an increase of 15.1 percent in May while the rental index — which includes rents, electricity and water — soared 18.7 percent against 18.5 percent in May.
Monthly inflation in the Kingdom added 0.5 points in June compared to May when it reached an annual 10.4 percent. It hit 10.5 percent in April, its highest level in more than 30 years. In May, it dropped 0.2 percent month-on-month after adding 0.9 percent month-on-month in April.
Historically, the Kingdom has managed inflation better than many other economies in the world. It managed to keep inflation at between 1 and 2 percent for nearly two decades.
The Samba Financial Group said in its latest report that the Kingdom’s inflation is likely to average 11 to 12 percent this year and is expected to ease to around 10 percent in 2009. The continued buoyancy of food prices and rents remains the most immediate cause of inflation. For the Kingdom, the key food variable is the price of rice, which has soared this year as a result of poor harvest in producer countries and export bans by them.
John Sfakianakis, chief economist at SABB, said: “Inflation rose in June, but was containable. On a quarterly basis, the second quarter’s headline inflation results are around the mid-10 percent band but the increase is measured and is much lower than the 2.6 percent witnessed between January and March this year.”