Saudi Arabia inflation rose to 3.3% in December on higher housing prices

The annual rate of inflation was up from 2.9 per cent in November

The Riyadh skyline. Reuters

Consumer prices in Saudi Arabia edged up to 3.3 per cent year-on-year in December, with higher housing costs driving up inflation, according to the latest government data.

The Consumer Price Index in December was up from the 2.9 per cent in November, Saudi Arabia’s General Authority for Statistics (Gastat) said, in the latest CPI data released on Sunday.

Prices in December were up by 0.3 per cent on the month, the Gastat report showed.

“Prices for housing were the main driver of the inflation rate in December 2022 due to their high relative importance in the Saudi consumer basket, with a weight of 25.5 per cent,” the authority said.

Housing, water, electricity, gas and other prices for other fuels increased by 5.9 per cent in December from the same month in 2021, “as a result of the increase in actual rentals for housing by 6.8 per cent and which, in turn, was affected by the increase in apartment rental prices”.

Prices of these commodities were up 0.9 per cent from November, “as a result of the [monthly] increase in actual rentals for housing by 1.1 per cent”, the data showed.

Food and beverage prices increased 4.2 per cent in December on an annual basis, mainly due to higher meat and poultry prices, the report said.

Transport prices rose 4.1 per cent year-on-year, driven primarily by a 5 per cent increase in car prices in the kingdom.

Restaurants and hotel prices increased by 6.8 per cent from December 2021, as catering services costs rose.

Education prices climbed 3.6 per cent from the same month in 2021, amid higher pre-primary and primary education fees.

By contrast, personal goods and services prices decreased by 0.4 per cent year-on-year, due to lower charges for bringing in domestic helpers, the report said. Clothing and footwear prices also decreased by 1.4 per cent in the same period.

Inflation globally has risen sharply due to steep increases in the prices of food and other commodities since the Ukraine conflict began in February last year.

However, inflation in the GCC has been significantly lower than in most advanced and emerging market countries amid improved economic activity, driven by higher oil and gas prices.

Saudi Arabia's preliminary estimates for 2023 indicate real gross domestic product growth of 3.1 per cent, with inflation projected at 2.1 per cent, Saudi Finance Minister Mohammed Al Jadaan said in December.

The Arab world's largest economy is forecast to have grown 8.5 per cent in 2022 and the kingdom's inflation rate last year was about 2.6 per cent, he said.