Saudi Arabia's inflation rate slowed to 3% in February compared with 3.4% in January as prices of food and transportion, softened, government data showed on Wednesday.
The monthly consumer price index (CPI) was tempered by a 0.7% decrease in food prices, the data showed.
Transportation prices also fell by 0.5% in February versus the previous month.
However, on a year-on-year basis the inflation rate was higher compared with 1.6% in February 2022.
The food & beverage basket was higher by 3.1% while the non-food basket rose by 7% year-on-year (YoY).
"Actual rents for housing increased by 8.3% in February 2023, reflecting the increase in rents for apartments by 21.4%" Saudi Arabia's General Authority for Statistics said.
The consultancy, Capital Economics, said this could mark the start of a gradual easing in inflation and they expect it to settle at 1.5-2.0% YoY by the end of this year.
"Looking ahead, last month’s reading is consistent with our view that inflation peaked in January and will continue to ease over the rest of this year. We expect that the headline rate to reach 1.5-2.0% y/y by the end of this year and it will hover around this level over 2024."
The consultancy added that the risks to the inflation forecast lie to the downside. "If oil prices remain elevated, as we expect, this will provide the government with scope to loosen fiscal policy further and Crown Prince Mohammed bin Salman has hinted at a cut to the VAT rate."
(Reporting by Brinda Darasha; editing by Seban Scaria)