Saturday, May 12, 2012
RIYADH (Zawya Dow Jones)--Saudi Arabia, the Arab world's largest economy, may continue to see inflationary pressures in the second quarter of this year mainly due to rent and food prices, the Saudi Arabian Monetary Agency, or SAMA, said Saturday.
But recent data shows that inflation rates in 2012 are growing at a slower rate than those of 2011, Sama said in a report posted on its website.
For instance, first quarter inflation rate slow downed to 0.6% compared with 1.5% in the same period last year.
Saudi Arabia's annual rate of inflation edged down to 5.3% in April from 5.4% in March, mainly due to lower food prices, data from the Central Department of Statistics and Information showed Thursday.
Rent, fuel and housing-related services rose 9.2% in April from a year earlier, compared with an 8.9% jump in March. Food and beverage prices dropped 4.3% from a year earlier, compared with a 5.1% rise in March, the CDSI said.
Saudi Arabia, a mostly desert country with scarce water supplies, imports the bulk of its food needs.
The Saudi Arabian Monetary Agency, the country's central bank, has repeatedly said that inflationary pressures caused mainly by an increase in global food prices are worrying, but the central bank sees no need to change interest-rate policy.
Economists expect inflation in the world's top oil exporter to remain higher than its historic average of 1% as the government continues to post expansionary budgets.
Saudi rents and property prices are rising as the kingdom struggles with a housing shortage, which could push the annualized inflation rate as high as 7% later this year, up from 5.2% in 2011, they say.
Spending programs announced last year by King Abdullah, which are likely to cost the government at least 485 billion Saudi riyals ($129.3 billion) over several years, could also add to inflationary pressure in the kingdom.
-By Summer Said, Dow Jones Newswires; +966 546 842373; summer.said@dowjones.com
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
12-05-12 1209GMT
