Saudi Arabia’s inflation forecast drops to 1.7 per cent

Dubai: Saudi Arabia’s inflation for this year is projected to be lower than earlier estimates due to ongoing growth in the non-oil sector.

Jadwa Investment firm has revised its inflation forecast for 2024 down to 1.7 per cent, from the previous estimate of 2 per cent.

The report notes, “While we anticipate higher inflation rates in the second half of the year compared to the first half, the increase will be less significant than we had previously predicted.”

This reflects that Saudi Arabia is on the right track to achieving Saudi Vision 2030 targets, with the exact goal of establishing an economy that’s non reliant on oil, the drop on the inflation forecast proves the success of that.

In the first half of 2024, consumer prices in Saudi Arabia grew by 1.6 per cent, largely driven by rising housing costs.

For the latter half of the year, Jadwa expects a gradual rebound in food and beverage prices, reflecting global trends.

Shipping prices may exert some pressure, but the rental market is expected to stay tight due to high interest rates and a surge in expatriates.

If interest rates decrease before the year ends, rental demand might soften as lower rates could prompt Saudi nationals to re-enter the mortgage market.

Other non-oil sectors, such as transport, hospitality, and general services, are expected to experience increased demand for the rest of the year.