Consumer prices in Saudi Arabia went up 4.1 percent in January and 4.6 percent in February. April has seen prices increase 4.7 percent, the highest year-to-year increase since June. Saudis earning meager salaries are feeling the pinch, especially in rents and food.
“I only make SR3,000 per month and have been hit hard by the recent price increases,” said Mohammed, an accountant in a Jeddah firm. “I don’t know what we can do. I think the Ministry of Commerce should take up a larger role in balancing prices by helping major companies here import for less.”
Following data issued this month in its report, “Inflation in Saudi Arabia: Drivers, Trends and Outlooks,” Samba Financial Group stated that inflation is expected to continue to increase rising before stabilizing at near 5 percent over the next three years. The report also said that this is in line with International Monetary Fund’s (IMF) expectations for consumer prices to rise to 5.2 percent in 2010 and 5 percent in 2011.
“Food prices over the past few months have been steadily increasing, but is not necessarily unique to Saudi Arabia,” said John Sfakianakis, group general manager and chief economist at Banque Saudi Fransi.
“The main driver behind the rise in food prices in the Kingdom is directly connected to the factor of being a major importer of goods and food. The Kingdom currently imports between 70 to 80 percent of its food from abroad.”
Sfakianakis added that unlike in 2008, the rise in food prices is not linked to oil prices. “If you remember two years ago prices rose because producers were passing on the cost of high oil prices as related to production of their goods to the consumer,” he said. “However, at a little over $80 a barrel, currently, I don’t believe this is happening yet.”
Recommending a way Saudi families could brave the increase in prices, the economist said that local consumers should learn how to research the prices of items across a variety of retailers. “Currently, it is not wise to merely go shopping and think that one can just find a good deal on certain items. Consumers should always look at the market and refer to the Ministry of Commerce’s website to compare the prices of staple food items,” he said.
