The 2011 figure is below the Saudi Arabian Monetary Agency's (SAMA's) forecast of 5.8 percent, published in its 47th annual report, and above the Finance Ministry's December estimate of 4.7 percent, Reuters said.

Mohammed Nasser Aljadeed, a Saudi banker and economic adviser, said food prices in the Kingdom are acceptable compared to the G20 economies. But there is need to control rent to rein in inflation further."

However, Aljadeed warned that due to the government's high spending plans for 2012, there may be some negative implications. The ministries of finance, economy and commerce need to go for alternative effective tools to keep inflation at acceptable levels in the Kingdom, he said.

Commenting on the inflation report, Jarmo T. Kotilaine, chief economist at the National Commercial Bank, told Arab News: "This continues a fairly consistent picture that has emerged in recent months. The key drivers of inflation from earlier in the year — food and housing — are not as important as they were and the effects of higher government spending are being to a degree counteracted by the slower global economic and renewed safe haven status of the dollar.

"The most encouraging aspect of these figures is the negative contribution of food prices for the first time in a quite a while. This may not be sustainable but it reflects the reality that the strong momentum of commodity prices in the wake of stimulus measures the world over has waned a little bit."

From the Saudi perspective, he pointed out, the prospect of more of the same means historically elevated inflation but diminished concern about higher inflationary expectations. It is a welcome element of relative macroeconomic stability at a time of elevated global uncertainty, he added.

The Central Department of Statistics and Information data showed inflation in the Kingdom edged up to 5.3 percent on an annual basis in December. Month-on-month, price growth in the Kingdom was 0.2 percent, after increasing at the same pace in November.

According to Reuters, in December, food costs, which amount to 26 percent of Saudi consumer expenses, dipped by 0.1 percent month-on-month, which was their first decline in seven months.

Prices of housing, one of the main inflation drivers, and related energy rose 0.5 percent in December for the second month in a row, the data showed.