Riyadh: The annual growth in Saudi Arabia's M3 money supply slowed in February for a fifth straight month, central bank data showed yesterday.

M3, one factor potentially influencing inflation, grew 5.6 per cent in February year-on-year, down from 8.3 per cent in January, due mainly to a near 10 per cent drop in time and savings deposits, data published by the Saudi Arabian Monetary Agency (Sama) showed.

Demand deposits, a more liquid component of M3, rose by almost 21.6 per cent in February year-on-year.

Inflation in Saudi Arabia accelerated to an annual 4.6 per cent in February, its highest level since June and up from 4.1 per cent in January after a rise in food costs.

Sama said last month that housing will keep inflation rising during the first quarter but a stabilisation in food prices will keep it below the 1.5 per cent recorded in the previous quarter.


Sama data showed however that bank claims on the private sector rose by an annual 1.6 per cent in February to 742.1 billion Saudi riyals (Dh726.5 billion), and up 0.9 per cent from January, their highest month-on-month jumps since August.

The growth in bank claims on the private sector, which also includes investments in private securities, measures lender confidence in the economy's prospects.

Bank credit to the private sector, which excludes bank investment in private securities, rose by an annual 0.6 per cent in February to 714.2 billion riyals up from less than 0.1 per cent in January.