Saudi Arabia: Drop in consumer prices reach 15-year low in May
June 14, 2017
Consumer prices in Saudi Arabia decreased 0.2% in May compared to the previous month’s 0.1% increase. The decline reflected lower prices for metal products, machinery, equipment as well as basic chemicals and rubber.
On an annual basis, consumer prices fell for the fifth consecutive month in May, recording a 2.2% drop. May’s print was the lowest reading in over 15 years. Meanwhile, annual average variation in consumer prices plunged to its lowest level in over 10 years as it swung from plus 1.9% in April to minus 1.2% in May.
Inflation is still expected to return in the coming months on the back of proposed curbs to oil production and planned hikes in administration prices. Saudi Arabia promised significant cuts to oil exports starting in July and demand is expected to outpace supply. Weak domestic demand and a strong currency, however, will keep inflation subdued.
Author: Jan Lammersen, Economist