DUBAI - Saudi Arabia's annual inflation rate rose to 6.2% in June, the highest this year, from 5.7% in May, official data showed on Thursday.

June marked a third consecutive monthly rise reflecting an increase in value-added tax introduced last year.

"Noting that consumer prices still reflect an increase of the value added tax (VAT) from 5% to 15% in July 2020, the rise of the CPI resulted mainly from higher prices of transport (+22.6%) and food and beverages (+8.1%)," the General Authority for Statistics said.

The VAT increase came as the Saudi government sought to bolster state coffers depleted by the twin shock of last year's oil price crash and the COVID-19 pandemic, as well as voluntary oil production cuts implemented to help stabilise world prices.

To help alleviate rising living costs, Saudi Arabia, the world's largest oil exporter, last week set a cap on local gasoline prices for July. 

Month on month, consumer prices in June increased by just 0.2%, the statistics authority said.

Inflation is expected to start declining from July as the base effect of the VAT increase will drop out of the annual price comparison, London-based Capital Economics has said.

It estimated the headline rate will slow to around 1%-1.5% year on year.

The International Monetary Fund has said it expects annual average inflation of 3.2% this year.


(Reporting by Davide Barbuscia; editing by Jason Neely) ((; +971522604297; Reuters Messaging: