Saudi Arabia’s consumer price index rose 0.3 percent year-on-year in August driven mainly by higher prices in the transport sector as well as food and beverages, according to government figures released on Wednesday.
Prices were up 0.4 percent month-on-month from July 2021, the Saudi General Authority for Statistics said.
Saudi Arabia saw a massive rise in its inflation rate between June 2020 and June 2021 because of VAT being tripled to 15 percent. That effect, however, faded in July 2021 when the effect of the VAT increase no longer weighed in the annual price comparison.
In August, transport prices rose 6.5 percent due mainly to a 44 percent rise in prices of fuel and lubricants. The Kingdom, the world’s biggest oil exporter, in July set a cap on gas prices at the pump in a move to cool living costs.
The Food and Beverages index rose 1.9 percent, mainly due to an increase in the price of foodstuff.
The London-based consultancy Capital Economics said Saudi Arabia’s headline rate is likely to pick up towards the end of this year and into 2022 on the back of some re-opening inflation, the effects of global supply shortages and unfavourable base effects created by the tightening of restrictions earlier this year.
“Even so, inflation will remain weak at 1.0-1.5 percent y-o-y over the course of 2022-23,” it added in a recent note.
The International Monetary Fund expects Saudi Arabia’s real GDP, an inflation-adjusted measure, to grow 2.1 percent this year as the kingdom recovers from the pandemic’s impact.
(Reporting by Brinda Darasha; editing by Daniel Luiz)
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