Saudi inflation rebounds from 28-month low

RIYADH. December 30. KAZINFORM Saudi Arabia's annual inflation climbed to 4.0 percent last month from October's 28-month low on rising home rents and import costs, nearing the government's full year forecast, official data showed on Tuesday; Kazinform refers to the Arab News.
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The global financial crisis trimmed inflation rates across the Gulf Arab region from last year's record peaks, with some countries such as the United Arab Emirates experiencing deflation.

But price pressures are seen rising again as key players in the world's top oil exporting region recover from this year's downturn.

The Kingdom's cost of living index stood at 124.7 points in November, up from 119.9 points a year earlier, data from the official statistics authority showed. Annual inflation reached 3.5 percent in October, its lowest level since June, 2007.

On the month, consumer prices rose 0.3 percent in November, after increasing by 0.7 percent in October.

"The rise is a combination of imported inflation, mainly higher costs of foodstuffs as well as the usual (home rents) domestic inflation suspects ... It could indicate a pick up in domestic demand," said John Sfakianakis, chief economist at Banque Saudi Fransi, Calyon's Saudi affiliate.

Analysts were expecting inflation to rebound from its October level mainly due to a chronic housing shortage and a weaker US dollar, which raises the cost of imports.

"We had expected inflation to bottom out in October and going forward we expect the inflation rate to rise driven by food, other costs and rents as economic activity picks up," said Monica Malik, chief economist at EFG-Hermes in Dubai.

The government has estimated annual inflation to reach 4.4 percent on average in 2009, below a record high of 9.9 percent last year but above an average 2.3 percent seen in the previous three years; Kazinform cites the Arab News.

See www.arabnews.com for full version

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