RIYADH: Saudi Arabia’s annual inflation rate fell for a sixth-month running to a 19-month low of 5.21 percent in April, with official data showing food price rises continued to decline while pressures from rents remained steep.
Saudi Arabia’s cost of living index stood at 121.2 points on April 30 compared with 115.2 points a year earlier, Saudi Arabia’s Central Department of Statistics said on its website.
That compared with inflation of 6 percent in March and was the lowest inflation rate since September 2007.
“Inflation is falling due to lower cost of food products which are now being passed onto the consumer. A somewhat stronger dollar and global deflation is helping Saudi Arabia’s inflation to moderate. There is still a lag effect for foodstuffs which should help inflation come down further.
However, rents will keep inflation at around 5 percent on an average on annual basis which are high as per historical levels. Deflation in Saudi Arabia, as well as for many other regional countries, is a far cry and will not be witnessed,” John Sfakianakis, chief economist at SABB (the Saudi British Bank), said.
Inflation rates have declined rapidly in the largest Gulf Arab economy as commodity prices slumped and a stronger US dollar helped reduce import costs for the Kingdom, which pegs its riyal to the dollar.
“We are forecasting that inflation will average 4.8 percent this year as food prices fall further,” said Monica Malik, regional economist at EFG-Hermes in Dubai.
Food and beverage costs recorded a rise of 1.6 percent in April compared with a 2.8 percent advance in March. Last year, when inflation peaked at more than 11 percent in July, food and beverage costs in Saudi Arabia had surged an annual 16 percent. Rental price rises also eased to 18.8 percent in April compared with 20 percent in March, the data showed.
“Rents will stay high as there is a shortage of housing domestically.
In addition, with the continuation of the investment program continue to create housing demand from expatriates,” Malik said. Saudi Arabia said last year it would invest around $400 billion in the next five years, mainly to enhance infrastructure in the country of around 26 million people.
— With input from agencies
