DUBAI - Saudi Arabia's inflation rate fell slightly to 5.2% in February from 5.7% in the prior month, but continued to reflect for the eighth consecutive month a tripling of the value-added tax in July, government data showed on Monday.
The rise in prices was again mainly driven by increases in food and beverages, which recorded their highest annual increase at 11.2%, the General Authority for Statistics said. Food prices have a weight of 17% in the Saudi consumer basket.
Transport prices increased by 9.8%, mainly due to a 9.9% rise in prices of purchase vehicles.
Annual inflation was 3.4% in 2020, but picked up in the second half of the year after the July VAT hike to 15%. The rise followed mild inflation in the first half and a deflationary trend in 2019, when the annual rate was -2.1%.
The economy of the world's largest oil exporter contracted last year, but data suggest the rate of decline slowed in the third quarter as some COVID-19 restrictions were lifted, and GDP is expected to return to growth this year.
Some economists scaled back their headline growth forecasts for Saudi Arabia, the largest Arab economy, after OPEC and its allies agreed to extend most oil cuts into April, leading to a more gradual increase in Saudi oil production than previously expected.
(Reporting by Yousef Saba; Editing by Kim Coghill) ((Yousef.Saba@thomsonreuters.com; +971562166204; https://twitter.com/YousefSaba))