Saudi June inflation edges up to 2.2%

JEDDAH: Saudi Arabia’s inflation edged up to 2.2 percent in June, according to the latest consumer price data released by the Central Department of Statistics.
Prices of housing and utilities rose 3.0 percent from a year earlier in June; food and beverage prices climbed 2.2 percent.
Saudi CPI rose to 2.1 percent year-on-year in May, up from 2.0 percent in April, its first rise in nine months, but was mainly due to a lower base effect.
Food price inflation recorded a small year-on-year rise in May, but showed a deceleration in monthly terms.
Foodstuffs, which account for 21.7 percent of the CPI basket, saw prices rise by 1.4 percent, year-on-year in May, up from 1.3 percent, year-on-year in April. However, in month-on-month terms, food prices slowed to 0.1 percent in May, down from 0.4 percent in April, Jadwa Investment noted in its Inflation update for May 2015.
“Looking ahead, we expect inflation to gradually firm up in the second half of the year compared to the first half,” said in the Jadwa researchers in their report issued last month.
“Food inflation is expected to accelerate as the deflationary trend in international food prices softens. Housing inflation should continue to be the major source of domestic inflationary pressure, as the growth in monetary aggregates cools for the remainder of 2015,” he added.
According to the Jadwa report year-on-year inflation for housing recorded a second consecutive rise in May to reach 3.2 percent, up from 2.2 percent, and 3.1 percent in March and April respectively.
Since the start of the year, housing inflation remained the largest contributor toward overall inflation for every month, and contributing 0.8 pp in May.
The slow progress in government housing initiatives means that the shortage in supply of homes should persist through 2015, which will continue to put upward pressure on home prices and rents, stated the inflation report.