Saudi Arabia: Inflation increases in September
October 15, 2021
Consumer prices increased 0.20% over the previous month in September, stronger than August’s 0.07% rise. September’s print reflected higher prices for food, utilities, and recreation and culture relative to the previous month, which was somewhat offset by lower clothing and footwear prices.
In September, inflation rose to 0.6% from 0.3% in August. Inflation remains relatively low due to the fading impact of the value-added tax rate, which was increased from 5% to 15% back in July 2020. Meanwhile, annual average inflation decreased to 4.2% in September, down from 4.7% in the previous month.
Commenting on the inflation outlook, analysts at the EIU noted:
“Following an estimated 3.1% rise in 2021, we expect year-on-year inflation to slow to 1.9% in 2022. The moderation in inflationary pressures will reflect a number of factors, including a stronger US dollar (against which the riyal is fixed), lower international commodity prices and a further easing of pandemic-related disruption to global supply chains.”
Author: Steven Burke, Economist