JEDDAH: Saudi Arabia's year-on-year inflation stayed at 5.2 percent in November, data from the Central Department of Statistics showed on Tuesday. Monthly inflation slowed to 0.2 percent, the lowest since February.
Commenting on the latest figures, Nahed Taher, founder and chief executive officer of Gulf One Investment Bank, said: "Despite the rise in November, the inflation rate is lower than expectations."
Other factors are instrumental in inflation figures, she pointed out.
"As riyal is pegged to the dollar we have fixed exchange rate, which means we are importing inflation from abroad," she told Arab News.
"Some of the global currencies such as euro and other Asian currencies are depreciating against the dollar. This will adversely affect the Kingdom's trade as purchasing power of those countries will be affected," Nahed said.
Also Tuesday, Jadwa Investment said food prices rebounded from their near two-year low in October, though at 4.2 percent food price inflation was the second lowest this year.
Fresh fruits and fish were the main sources of food price inflation.
Food is the largest component of the cost of living index and the rise in food price inflation offset a sharp decline in inflation for "other expenses and services", Jadwa said in its inflation report.
The pick-up in inflation in most other components of the cost of living index continued in November.
According to the Jadwa report, inflation for clothing and footwear hit a two-and-a- half year high, for transport and telecoms it was at its highest since July 2010 and for home furniture its highest since September 2010.
"This reflects strong consumer spending and we expect inflation from these sources to rise further in 2012, though as it should stay low in absolute terms it will not put too much pressure on headline inflation," Paul Gamble, head of research at Jadwa, said.
Rental inflation stayed at 8 percent in November after rising in each of the previous five months.
About November inflation figure, Khan H. Zahid, vice president and chief economist of Riyad Capital, said this number is the same as October, when it was also 5.2 percent. And, both are slightly lower from the 5.3 percent figure in September.
"The fact that inflation in November did not rise compared to October is good news because typically, we see a slight uptick during the Haj season. We are forecasting inflation to be 5 percent for this year and economic growth of over 7 percent," Zahid said.
Jarmo T. Kotilaine, chief economist at the National Commercial Bank (NCB), said food prices are largely set in the global markets and would be to an extent vulnerable to a renewed global downturn.
"The housing market has a persistent large deficit which will take years to overcome and will keep a degree of pressure on rentals. The recent data suggests that increased government spending has contributed to overall inflation, although the relative strength of the dollar is having the opposite effect," Kotilaine added.
The NCB said earlier this month the Kingdom's monetary base (M0) expanded to SR259.7 billion last month, a 12.8 percent increase on an annual basis.
A major portion of M0 is attributed to currency outside banks, which grew by an impressive 28.6 percent Y/Y reaching SR123.0 billion.
While total deposits continue to grow on an annual basis settling at SR1.05 trillion, they have been within a SR20 billion range over the last six months.
This resulted in a slight increase in the loans-to-deposits ratio to 76.7 percent following the previous month's figure of 76.5 percent.
Meanwhile, SAMA's (Saudi Arabian Monetary Agency's) net foreign assets continue to rise as they have accumulated just over SR291.8 billion since the beginning of 2011.
© Arab News 2011
