Saudi Arabia: Inflation rises to over one-year high in August
Inflation edged up to 3.0% in August from July’s 2.7%. August’s reading marked the highest inflation rate since June 2021. The figure was driven by slightly stronger increases in prices for food, transport and housing. Price pressures also intensified for recreation and culture as well as restaurants and hotels—both consumer-facing sectors—in line with the stronger non-oil activity suggested by the August PMI.
The trend pointed up, with annual average inflation coming in at 1.8% in August (July: 1.5%).
Finally, consumer prices increased 0.38% in August over the previous month, a smaller increase than July’s 0.51% growth.
The acceleration seen in August was due to a base effect as inflation eased in month-on-month terms. Our panelists see inflation peaking this quarter and easing toward the end of the year. The government’s cap on petrol prices, together with higher interest rates and softening commodity prices in recent months, should dampen inflation. That said, supply bottlenecks and demand-pull factors remain upside risks.