RIYADH - Saudi Arabia’s annual inflation rate slowed to 6 percent in March from 6.9 percent in February due mainly to a decline in food price growth and local demand as the global economy slows.
Saudi Arabia’s cost of living index rose to 121 points by March 31 compared with 114.2 points a year earlier, the Central Department of Statistics said on its website.
“Inflation is falling fast in Saudi Arabia and this ... is set to continue as it continues to benefit from global deflation,” said John Sfakianakis, chief economist at SABB bank, HSBC’s Saudi affiliate.
“Given the downward pressure, inflation could average ... around 5 percent in 2009.”
The annual inflation in food and drink prices eased to 2.8 percent in March from 4.6 percent in February, but that of residential rents stabilized at 20 percent in March while transport costs showed a slight acceleration.
“Rents are not declining fast enough as a consequence of a slow expansion in the construction of residential buildings and the overall shortage of housing,” Sfakianakis said.
Inflation in the Kingdom peaked at more than 11 percent in July 2008, the same month that saw oil hit a record price of $147 a barrel.
Oil prices have since tumbled to around a third of that level as the global financial crisis hit demand and major economies went into recession. – Reuters