Saudi Arabia CPI Inflation Rate: Data, Forecast & Trends

Saudi Arabia's annual inflation rate demonstrated notable stability in April 2025, holding steady at 2.3% year-on-year (YoY) for the second consecutive month, according to the General Authority for Statistics (GASTAT). This rate marks the fastest pace of annual price growth since July 2023. This stability, particularly in an environment of fluctuating global commodity prices and lingering supply chain challenges, underscores the Kingdom's relatively strong macroeconomic management.

A deeper dive into the components of the CPI reveals the underlying drivers of this 2.3% annual inflation. The primary contributor to the inflationary pressure remains Housing, Water, Electricity, Gas & Other Fuels, which saw a significant YoY increase of 6.8% in April 2025. This was predominantly fueled by an 8.1% hike in overall housing rents, with apartment rental prices spiking by a substantial 11.9%. This component holds a considerable weight of 25.5% in the CPI basket, thus exerting a dominant influence on the overall headline figure. The rapid population growth and urbanization, particularly in major cities like Riyadh, continue to underpin demand in the housing market, leading to upward pressure on rents.

Another notable contributor was Food & Beverages, which accelerated to 2.2% YoY in April, up from 2.0% in March and representing its highest rate since March 2023. This increase is often influenced by global food commodity prices and domestic agricultural supply conditions.

In contrast, several categories experienced moderating or even deflationary pressures. Communication services saw a slight decrease of 1.5% YoY. Transport prices declined by 1.0% annually, largely due to a 1.8% slump in vehicle prices. Clothing & Footwear also recorded a decrease of 1.2% YoY. Recreation & Culture witnessed a decline of 0.7%. This divergence among components highlights the varied nature of price dynamics within the Saudi economy.

On a month-over-month (MoM) basis, the Consumer Price Index in Saudi Arabia recorded a slight increase of 0.3% in April 2025 compared to March 2025, maintaining the same pace as the previous month. This modest monthly increment suggests a controlled and predictable short-term price trajectory.

The primary drivers of this monthly increase were:

• Housing, Water, Electricity, Gas & Other Fuels: Up by 0.3% MoM, mainly due to a 0.4% increase in actual housing rents.
• Food & Beverages: Increased by 0.4% MoM.
• Personal Goods and Services: Rose by 0.8% MoM.
• Restaurants & Hotels: Climbed by 0.7% MoM.
• Furnishing and Home Equipment: Edged up by 0.4% MoM.
• Education: Saw a 0.2% increase MoM.
• Clothing & Footwear: Went up by 0.2% MoM.

Conversely, some components saw monthly decreases, including Recreation and Culture by 0.4%, and the Transportation, Communication, and Health section by 0.1%. The prices of tobacco products showed no significant change in April.

Saudi Arabia's average annual inflation rate for the calendar year 2024 stood at 1.7%. This figure represents a slight increase compared to the previous year, yet it remains relatively low when contrasted with global inflationary trends experienced by many other economies.

The primary drivers of this modest rise in consumer prices were increases in housing, water, electricity, gas, and other fuels, which saw an 8.8% surge, significantly influenced by higher rental prices. Food and beverages also contributed to the upward pressure, albeit to a lesser extent, with a 0.8% rise. Conversely, some sectors experienced price declines, including transport, communication, health, and clothing and footwear. This balanced movement across different categories helped keep the overall average inflation rate within a manageable range for the kingdom throughout 2024.

Over the last three decades, Saudi Arabia has generally experienced relatively stable and often low inflation, a characteristic largely attributable to its fixed exchange rate regime against the US dollar and extensive government subsidies on essential goods and services.

Looking back, the 1990s and early 2000s often saw periods of low single-digit inflation or even deflation. For instance, in 1999, the inflation rate was -1.33%, and in 2001, it was -1.12%. This was partly due to conservative fiscal policies and abundant oil revenues that allowed the government to absorb external price shocks.

A notable surge occurred in the late 2000s, particularly in 2008, when inflation peaked at 9.87%. This was largely a reflection of a global commodity boom, especially in oil and food, which transmitted inflation into the domestic economy despite subsidies. The fixed exchange rate also meant Saudi Arabia imported inflation from the US, which was experiencing its own inflationary pressures.

Following the 2008 peak, inflation generally moderated, hovering in the low single digits for much of the 2010s. The introduction of a Value Added Tax (VAT) in January 2018 at a rate of 5%, followed by an increase to 15% in July 2020, temporarily pushed inflation up. Price pressures have normalized after the post-pandemic surge, largely aligning with global trends.

Several factors pose risks to the future inflation outlook for Saudi Arabia, intertwining economic, geopolitical, and policy considerations:

• Housing Market Dynamics: The persistently high increase in housing rents remains the most significant upside risk. While the government has initiatives under Vision 2030 to boost housing supply, the rapid pace of population growth and urbanization, particularly in major cities like Riyadh and Jeddah, continues to exert upward pressure. Should housing supply not keep pace with demand, these rent increases could persist, forming a stubborn component of headline inflation. Discussions around potential rent caps could mitigate this, but their implementation and effectiveness remain to be seen.
• Global Commodity Prices: Despite significant domestic subsidies, Saudi Arabia is a net importer of many goods, including a substantial portion of its food. Fluctuations in global food commodity prices, driven by geopolitical conflicts, adverse weather events, or supply chain disruptions, can transmit into domestic inflation. Similarly, while consumer fuel prices are controlled, higher global oil prices can indirectly affect import costs for businesses, potentially leading to higher wholesale prices that could eventually pass through to consumers.
• Exchange Rate Regime (USD Peg): The Saudi Riyal's peg to the US dollar offers significant exchange rate stability and reduces imported inflation from countries whose currencies depreciate against the dollar. However, it also means that Saudi Arabia effectively imports the monetary policy and inflationary pressures of the United States. If the US experiences a period of higher inflation, this could be transmitted to the Saudi economy. Conversely, a stronger dollar could alleviate import price pressures from some non-dollar denominated goods.
• Fiscal Policy and Subsidy Adjustments: The Saudi government has historically used extensive subsidies to manage inflation. Any significant adjustments to these subsidies, as seen with the VAT increase in 2020 or past energy price reforms, could directly impact consumer prices. While such reforms are often strategic for fiscal sustainability and economic diversification under Vision 2030, they introduce short-term inflationary spikes. Future fiscal reforms, if any, will need to be carefully managed to avoid undue price shocks.
• Vision 2030 Projects and Demand-Side Pressures: The ambitious megaprojects and diversification efforts under Vision 2030 are driving significant economic activity, investment, and job creation. This robust non-oil sector growth could generate demand-side inflationary pressures, particularly in sectors experiencing rapid expansion such as construction, tourism, and services. The influx of foreign talent and increased domestic consumption could lead to higher prices for certain goods and services.
• Global Supply Chain Resilience: While some supply chain disruptions have eased globally, ongoing geopolitical tensions and the potential for new shocks (e.g., disruptions in key shipping lanes, trade protectionism) could re-emerge as inflationary drivers. Saudi Arabia's reliance on imports means that external supply chain vulnerabilities remain a risk to domestic price stability. The wholesale price index, which showed a 2% YoY increase in April, highlights these external pressures.

Saudi Arabia Inflation Data