Dubai: Saudi Arabia’s annual inflation rate fell back marginally in February after jumping in January, when the government introduced a 5 per cent value-added tax (VAT) and hiked domestic gasoline prices, official data showed on Wednesday. Consumer prices rose 2.9 per cent from a year earlier last month after climbing 3.0 per cent in January. Compared to the previous month, prices increased 0.1 per cent in February. The February figures suggested the economy might escape any upward spiral of inflation due to the new tax and more expensive fuel, which are part of a government drive to cut a big budget deficit caused by low oil prices.
A major reason for this is weakness of the economy, as consumers are not spending heavily to push up prices while many companies are discounting to try to keep market share.
