RIYADH: Annual inflation in Saudi Arabia eased off from a peak of at least 30 years to 10.9 percent in August as gains in key components — rent and food prices — steadied in the largest Arab economy, official data showed yesterday.

The Saudi cost of living index was 117.9 points on Aug. 31, according to Central Department of Statistics data carried by the Saudi Press Agency. That compared with 106.3 points a year earlier. Food and beverage prices gained an annual 15.8 percent in August, down from 16 percent a month earlier, while the rental index — which includes rents, fuel and water — added 18.5 percent, down from 19.8 percent in July.

“The property market fundamentals still provide for more rises in rent prices because it’s an under-supplied market,” said John Sfakianakis, chief economist at SABB bank. Inflation of 11.1 percent in July was the highest in at least 30 years. The annual increases of food and rent prices in August are the lowest since June.

“These numbers reflect a general sense that inflation is getting closer to a peak, which could happen in September, where we will see a new rise,” Sfakianakis added.

Demand will hot up again for food and consumer goods this month that coincides with Ramadan and precedes the start of the school year, he said.

Inflation is a key challenge across the Gulf Arab region, where most states peg their currencies to the dollar, a fact that has contributed to inflation as weakness in the US currency drove up import costs.

“The peak is close but a substantial decline is not likely: The cost of living index will not fall to 8 or 9 percent. It is expected to end the year at about 10.5 percent,” he said.

The economies of Saudi Arabia and its neighbors are surging on a more than five fold rise in oil prices since 2002.

Analysts expect annual inflation to hit its peak toward the end of the third quarter, which coincides with the end of Ramadan, during which consumption and prices tend to rise.

Consumer prices rose 0.5 percent in August compared with July, when month-on-month price rises hit 1.6 percent, their fastest pace of growth in at least nine years.

The Kingdom has tried to offset the impact of inflation on its 25 million people by raising public sector wages and boosting subsidies this year.