SAUDI Arabia’s annual inflation rate stood at 2.3 per cent in June, up slightly from 2.2pc in May, according to the latest data released by the General Authority for Statistics, reports Arab News.
The increase in prices was primarily driven by a rise in housing rents, which continued to exert upward pressure on the cost of living, even as other consumer categories experienced mixed price movements.
Housing and utility costs remained the biggest contributor to inflation, rising by 6.5pc year on year. This surge was largely due to a 7.6pc increase in actual housing rents, with villa rental prices alone climbing 7.1pc compared to June last year.
Given that the housing component carries a significant weight of 25.5pc in the consumer price index basket, its persistent escalation has had an outsized impact on overall inflation.
Compared to its GCC neighbours, the kingdom’s inflation sits near the regional average. In the UAE, annual inflation hovered around 2.3pc in recent months, reflecting similar housing-related pressures.
The Saudi food and beverage segment experienced an annual increase of 1.5pc, driven by a 2.4pc rise in meat and poultry prices. The cost of personal goods and services rose by 4.1pc, influenced in large part by a 26.5pc spike in jewellery, watches, and antiques.
Restaurants and hotels also saw moderate inflation, rising 1.6pc annually, while education prices increased by 1.4pc, driven mainly by a 5pc hike in tertiary education fees.
At the same time, downward pressure came from a handful of categories. Prices for furnishings and household equipment fell by 1.7pc due to a decline in furniture and carpeting. Clothing and footwear prices dipped 0.6pc, primarily due to a reduction in garment costs, while transportation prices declined 0.7pc year on year, reflecting a 1.7pc drop in vehicle prices.
On a monthly basis, the CPI remained broadly stable in June, registering a modest 0.2pc increase from May according to the report. This was once again led by a 0.2pc rise in the housing category, alongside slight increases in food, personal goods, and recreation services.
Prices of health services and communication saw minor declines, while tobacco and transportation remained flat compared to the previous month.
Saudi Arabia’s inflation rate remains moderate by global and regional standards. A combination of government subsidies, regulated utility prices, and the riyal’s fixed exchange rate to the US dollar are key stabilising forces.
Additionally, the country’s subsidy framework, particularly in energy and essential food items, continues to shield consumers from global price shocks.
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