RIYADH: Inflation in Saudi Arabia eased to 10.35 percent in September from 10.9 percent in August, official data showed yesterday, in another sign that price pressures had peaked and that economic growth was likely to cool.
The slowdown in price rises comes as Saudi Arabia and other Gulf Arab countries implement emergency moves to stave off an economic crisis. The Saudi central bank last week slashed its benchmark repurchase rate by 100 basis points to 4 percent.
The cost of living index of the largest Arab economy was 118.3 points on Sept. 30 compared with 107.20 points a year earlier, official data showed.
Rents soared 21.7 percent in the month while food and drinks surged 15.5 percent, the data said. September coincided with Ramadan when food prices tend to rise as Muslims across the region host lavish banquets to fast.
Transport and telecommunications rose 0.3 percent in the month.
Other signs of cooling have also emerged recently with money supply growth, for example, slowing in September to 19.39 percent from 21.81 percent in August. “This indicates inflation is on a downward trend and that the peak was during the summer,” said John Sfakianakis, chief economist at SABB bank. “This says to me that the government’s priority in 2009 will no longer be inflation but growth.”
The International Monetary Fund expects economic growth for the Gulf Arab region to slip to 6.6 percent in 2009 after a forecast 7.1 percent in 2008, and that inflation would ease to 10 percent in 2009 after 11.5 percent in 2008.