Prices rising: Inflation in Saudi hits 2.8% despite housing cost drop

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Cars drive past the King Abdullah Financial District in Riyadh, Saudi Arabia December 18, 2018. Image used for illustrative purpose.

Cars drive past the King Abdullah Financial District in Riyadh, Saudi Arabia December 18, 2018. Image used for illustrative purpose.

REUTERS/Faisal Al Nasser

The consumer price index in the Kingdom of Saudi Arabia increased by an annual rate of 2.8 percent during the month of November, official data showed.

Saudi Arabia's increase in its consumer price index on a year-on-year basis was driven by price rises in 10 different sectors of the index, according to a new report released by General Authority for Statistics.

The highest increase in prices was in the transport sector at 12 percent, followed by tobacco at 10.2 percent. Restaurants and hotel prices have also increased by 8.6 percent, while food and beverages are up 7.7 percent, the data found.

Only two categories recorded declines in pricing in November, when compared to the same month last year. Clothing and footwear prices have fallen by 4.5 percent, while housing and utilities costs have dropped by 3.1 percent, due mainly to falling rents. 

“A number of government initiatives launched such as the introduction of VAT, subsidy cuts, and the expat levy have impacted the cost of living in Saudi,” Dana Salbak, a research associate at JLL MENA told Zawya by email.

“This, coupled with an overall slowdown in the economy, not just locally but also regionally and globally, has consequently resulted in a slowdown in demand for real estate, which resulted in rental decreases,” she added.

In April this year, a local daily reported that an average of more than 1,500 expatriates were leaving Saudi Arabia on a daily basis, driven mostly by the rise in the cost of living in the kingdom. (Read more here).

On a monthly basis, the consumer price index in Saudi Arabia fell by 0.2 in November in comparison to October’s inflation figure. This was driven by a drop in five sections of the index - mainly the same category of housing and utilities, which dropped at the highest rate of 0.8 percent.

Other categories to witness month-on-month declines were restaurants and hotels, and food and beverages, which fell by 0.2 percent and 0.1 percent respectively.

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(Reporting by Nada Al Rifai; Editing by Michael Fahy)

(nada.rifai@refinitiv.com)

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