Business | Economy
Saudi inflation reaches 30-year high
Saudi Arabia's annual inflation rose 10.6 per cent in June to a 30-year high due primarily to increases in food and housing costs, official data released on Sunday showed.
- Reuters
- Published: 23:35 August 3, 2008
Riyadh: Saudi Arabia's annual inflation rose 10.6 per cent in June to a 30-year high due primarily to increases in food and housing costs, official data released on Sunday showed.
The cost of living index for the largest Arab economy rose to 115.5 points on June 30 from 115 points in May, the Saudi Press Agency cited a report by the Ministry of Economy and Planning's Central Department of Statistics.
"We could be reaching some kind of plateau within three months but we don't see a rampant inflation that is out of control," said John Sfakianakis, chief economist at SABB bank, HSBC's subsidiary in Saudi Arabia.
Key challenge
Inflation is a key challenge across the Gulf Arab region, where currencies are pegged to the ailing dollar, as their economies surge on windfall revenues from oil that has been racing to record highs. The index was 104.4 points on June 30, 2007, according to data of the department.
Food and beverage costs advanced 15.8 per cent in June compared with an increase of 15.1 per cent in May while the rental index - which includes rents, fuel and water - soared 18.7 per cent versus 18.5 per cent in May.
Monthly inflation in Saudi Arabia added 0.5 point in June compared to May when it reached an annual 10.4 per cent. It hit 10.5 per cent in April, its highest level in more than 30 years. In May, it dropped 0.2 per cent month on month after adding 0.9 per cent month on month in April.
"Compared to the first quarter, monthly inflation has not been growing as fast as in the second-quarter," Sfakianakis said.
Saudi Arabia's annual inflation may hit its peak towards the end of the third quarter which coincides with the end of Ramadan, the Muslim fasting month which sees a surge in both consumption and prices, he said.
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