Inflation in Saudi Arabia rises to 3.4% on higher housing and utility costs

Food and beverage prices also increased in the kingdom in January

Rising housing prices were the main driver of inflation in Saudi Arabia last month. AFP

Annual inflation rate in Saudi Arabia climbed to 3.4 per cent in January on rising housing, water, electricity, gas and other fuel prices, as well as food and beverage costs.

The Consumer Price Index for January edged up from the 3.3 per cent recorded in December and 2.9 per cent in November, Saudi Arabia’s General Authority for Statistics (Gastat) said on Wednesday.

Housing, water, electric, gas and other fuels prices rose by 6.6 per cent during the month, while food and beverage prices climbed 4.2 per cent, the latest data shows.

“Prices for housing were the main driver of the inflation rate in January 2023 due to their high relative importance in the Saudi consumer basket, with a weight of 25.5 per cent,” Gastat said.

Food prices increased by 4.3 per cent, with meat and poultry prices going up 6.1 per cent and the price of milk products and eggs rising 15.8 per cent.

Transport prices climbed 3.8 per cent. Restaurant and hotel prices also increased 6.5 per cent amid higher catering costs rose, according to Gastat.

Education prices edged up 3.1 per cent during the month as a result of the increase in preschool and primary education fees by 4.6 per cent.

In contrast, personal goods and services prices fell 0.4 per cent due to a drop in domestic workers' recruitment fees. Clothing and footwear prices also declined during the month.

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.

The International Monetary Fund expects the kingdom’s economy to grow by 2.6 per cent this year and by 3.4 per cent in 2024.

The kingdom, the world's largest exporter of oil, benefitted from the rally in crude prices last year after Brent, the global benchmark for two thirds of the world's oil, rose by about 10 per cent, following a 50 per cent gain in 2021.

Brent hit a 14-year high of close to $140 a barrel in March last year after the start of Russia’s military offensive in Ukraine.