Inflation in Saudi reaches 14 months high of 3%

Inflation in Saudi reaches 14 months high of 3%

Saudi inflation climbs to a 14-month high of 3% in August driven by F&B prices: GASTAT. Saudi Arabia’s annual inflation rate accelerated to a 14-month high of 3 percent in August, up from 2.7 percent in July, according to data released by the General Authority for Statistics.

The uptick in the consumer price index, or CPI, is driven by a rise in food and beverage prices, GASTAT noted in a press release.

The annual growth in the price index for food and beverages stood at 4.0 percent in August, while meat prices surged 6.7 percent, according to GASTAT. 

“The food and beverages prices were the main drivers of the inflation rate in August 2022 due to their high relative importance in the Saudi consumer basket with a weight of 18.8 percent,” GASAT said in the press release.

As for the monthly inflation rate, it went up by 0.4 percent in August — driven mainly by a 0.9 percent increase in food prices. There was also a 0.4 percent rise in house utilities, gas and other fuels, according to the GASTAT press release.

“Personal goods and services prices increased by 0.3 percent, restaurants and hotels prices increased by 0.8 percent, as well as recreation and culture went up by 0.6 percent,” the GASTAT press releases added.

It is the third month in a row that the annual inflation has quickened, with May recording a 2.24 percent growth, followed by 2.31 percent and 2.67 percent in June and July respectively.

The 3 percent annual growth in CPI for August came in 0.2 percentage points above the analyst projection in a poll conducted by Bloomberg earlier this week.  

Analysts’ median projection envisaged it to be 2.8 percent.  This is the second month in a row when the actual Saudi inflation figures exceed the analyst forecast conducted by the firm.

Looking at the relative contribution by expenditure category to the annual growth in CPI in August compared to July, the higher rate of growth is driven mainly by the housing, water, electricity and other fuels category whose contribution increased by 0.14 percentage points to 0.64 percentage points, up from 0.5 percentage points in July. 

The contribution of restaurants and hotels also increased by 0.6 percentage points to 0.41 percentage points and that of transport went up by 0.5 percentage points to reach 0.52 percentage points in August.  

The Saudi Central bank, known as SAMA, said in a report issued earlier in August it expected a further year-on-year rise in inflation in the Kingdom in the third quarter of 2022  “as a result of the continuous improvement in domestic private consumption and the noticeable increases in global inflation rates, particularly in the prices of food and primary commodities.”

Moreover, SAMA predicted inflation to accelerate slightly in the third quarter compared to the second quarter partly due to seasonal factors such as the Hajj and the back-to-school season.