Inflation in Saudi Arabia likely to decline in coming months

Credit to private companies will increase, depending on the Saudi economy recovery, says Al-Sudairi, head of research at Al-Rajhi Capital

  
Riyadh, Saudi Arabia. Image used for illustrative purpose.

Riyadh, Saudi Arabia. Image used for illustrative purpose.

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RIYADH: The inflation rate in Saudi Arabia is expected to be 3.2 percent and the rate would decline because of a higher base, Mazen Al-Sudairi, head of research at Al-Rajhi Capital, told Arab News.

The cost of living index of Saudi Arabia remained in the positive trajectory and increased by 6.2 percent year-on-year in June 2021, mainly driven by a rise in value-added tax (VAT) from 5 percent to 15 percent in July 2020, according to Al-Rajhi Capital.

Saudi spending in the local market, especially in the retail, food, and beverages, and health segments continues to support the economy, it added.

Point of sales transactions continued their uptrend, increasing 4.6 percent in June 2021 compared to June of last year, primarily driven by an increase in restaurants and hotels, clothing and footwear, and health segments, Saudi Central Bank (SAMA) data revealed.

Credit to the private sector increased 16.8 percent year-on-year in June, while bank claims on the public sector increased 9.6 percent and the deposits grew by 10.2 percent, the official data showed.

Credit to private companies will increase, depending on the Saudi economy recovery, said Al-Sudairi.

SAMA also pointed out in its latest monthly report that remittances from Saudi nationals increased by 56 percent year-on-year in June 2021, while remittances growth from non-Saudi nationals declined 3.4 percent.

Remittance for Saudis increased due to an increase in travel while for expats the trend remains broadly flat, Al-Sudairi added.

The International Monetary Fund (IMF) said that Saudi Arabia’s economy is recovering well from the pandemic, and the Kingdom opened its doors to vaccinated foreign tourists on Aug.1.

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