|21 October, 2019

Saudi consumer prices slip yr/yr in September at slowest rate in 2019

The CPI index fell 0.7% in September on an annual basis and rose 0.2% when compared to August

People are seen in the Mall of Dhahran, Saudi Arabia, December 17, 2018. Image used for illustrative purpose.

People are seen in the Mall of Dhahran, Saudi Arabia, December 17, 2018. Image used for illustrative purpose.

REUTERS/Hamad I Mohammed

DUBAI - Saudi Arabian consumer prices fell in September compared with a year earlier for the ninth month in a row, but at the slowest pace so far this year, government data showed on Monday.

The consumer price index (CPI) fell 0.7% in September on an annual basis, easing from the 1.1% annual decrease in August.

The annual CPI declines have partly reflected the fading impact of last year's introduction of a value-added tax (VAT), implemented to increase government revenues.

The deflationary trend has been gradually easing as the government is having some success in boosting its non-oil sector, thanks to higher government spending.

The September CPI rose 0.2% on a monthly basis, data from the General Authority for Statistics showed.

"We think that headline inflation will gradually edge up over the rest of this year before returning to positive territory at the start of 2020, particularly if the government presses ahead with fresh tax hikes or subsidy cuts," said Capital Economics in a research note.

The International Monetary Fund has said it expects Saudi Arabia's non-oil sector to grow 2.9% this year, but in a recent report it slashed its overall growth estimates to 0.2% this year, largely because of oil output cuts. 

(Reporting by Davide Barbuscia; Editing by Saeed Azhar and Hugh Lawson) ((Saeed.Azhar@thomsonreuters.com; +971 44536787; Reuters Messaging: saeed.azhar.reuters.com@reuters.net))

More From GCC