RIYADH: Saudi Arabia’s inflation rate fell slightly to 2.7 percent in June compared to 2.8 percent in the previous month, driven by stable prices across all sectors, according to the latest report released by the General Authority for Statistics.
The monthly dip in inflation was primarily driven by prices of furnishings, household equipment and maintenance which fell by 0.6 percent in June.
The clothing and footwear prices dipped by 0.6 percent, while recreation and culture expenses dropped by 0.4 percent compared to May 2023.
However, housing, water, electricity, gas, and other fuel prices rose by 0.8 percent in June compared to May.
Saudi Arabia’s consumer price index has been easing against the backdrop of rising inflation across the world, with major economies like the UK witnessing an annual price rise of 8.7 percent in May.
However, the possibility of further rise of inflation in the oil-exporting countries, including Saudi Arabia, is very less, even at this time of global economic uncertainties, noted the International Monetary Fund in its Regional Economic Outlook for the Middle East and Central Asia released in May.
“Headline and core inflation in many oil-exporting countries like Bahrain, Iraq, Kuwait, Oman, Qatar and Saudi Arabia remain relatively lower than elsewhere — as subsidies and caps on certain products, the strengthening of the US dollar to which many of the countries peg their currencies, and limited share of food in the consumer price index basket have helped to offset imported inflationary pressures,” the IMF report noted.
Annual inflation rate climbs in June
Saudi Arabia’s inflation, however, rose slightly on an annual basis as the price rise was recorded at 2.2 percent in June 2022, the GASTAT report noted.
The annual rise was driven mainly by the higher prices of housing, water, electricity, gas and other fuels, which surged by 9.1 percent in June.
According to the report, prices of food and beverages also advanced annually by 1 percent in June.
It added that actual housing rent increased by 10.8 percent year-on-year in June 2023, mainly led by apartments which surged by 22.8 percent.
“Prices for rents were the main driver of the inflation rate in June 2023 due to their high relative importance in the Saudi consumer basket with a weight of 21 percent,” said GASTAT in the report.
Last week, the Financial Stability Report released by the Saudi Central Bank also predicted that inflation in Saudi Arabia is expected to decline this year.
According to the SAMA report, inflation in the Kingdom has been relatively low compared to other nations worldwide and will remain stable for the rest of 2023.
The IMF also echoed similar views in June, keeping its inflation projection for Saudi Arabia unchanged at 2.8 percent for 2023.
Kingdom’s WPI down 1.3% in June
Saudi Arabia’s Wholesale Price Index also decreased by 1.3 percent in June compared to the same month in 2022, signaling an acceleration in the decline of prices.
According to the GASTAT report, the prices of agriculture and fishery products decreased by 2.0 percent year-on-year in June, while metal products, machinery and equipment prices dropped by 1.8 percent during the same period.
“Other transportable goods decreased by 1.9 percent, due to the decrease in basic chemicals prices by 26.8 percent and wooden products prices by 7.9 percent,” GASTAT added.
Compared to May, the report added that the wholesale price index decreased by 0.2 percent, mainly driven by the dip in the prices of agriculture and fishery products by 1.8 percent.
