Annual inflation in the biggest Arab economy and the world’s top oil exporter eased from 5.9 percent in September, continuing its decline from an 18-month high of 6.1 percent in August. The central bank has said it is not yet a concern.

Food prices, which have the largest 26 percent weighting in the consumer price basket, jumped 1.6 percent month-on-month in October, while housing costs rose 0.6 percent, SPA said.

“Inflation is on a year-on-year decline although food inflation continues to climb as rents subside a little bit,” said John Sfakianakis, chief economist at Banque Saudi Fransi.

Analysts polled by Reuters expect average inflation of 5.3 percent this year and 5.1 percent in 2011, still well below a record high of 11.1 percent in July 2008.

Saudi Arabia’s economy is seen expanding by 3.8 percent this year, following a mere 0.6 percent expansion in 2009, helped by recovery in crude prices and generous government spending.

Finance Minister Ibrahim Al-Assaf said the country would spend more than budgeted this year.

Economists believe that inflation will climb going into next year with the weak dollar adding pressure.

“It is expected that this month and the next inflation will climb and even continue through the first half of next year, mainly due to the peg of the Saudi riyal to the declining dollar,” said Abdulhamid Al-Amry, a member of the Saudi Economic Association.

“This has a negative effect, lowering the value of the riyal which results in rising costs,” he said.