Saudi Inflation Slows to Lowest Level Since 2021

A Saudi citizen buys sweets from one of the major stores in preparation for Eid al-Fitr (SPA)
A Saudi citizen buys sweets from one of the major stores in preparation for Eid al-Fitr (SPA)
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Saudi Inflation Slows to Lowest Level Since 2021

A Saudi citizen buys sweets from one of the major stores in preparation for Eid al-Fitr (SPA)
A Saudi citizen buys sweets from one of the major stores in preparation for Eid al-Fitr (SPA)

In March, inflation in Saudi Arabia slowed down to its lowest level since 2021, hitting 1.6% annually compared to 1.8% in February.

This drop was mainly due to a slowdown in food and beverage price increases. However, housing rents continued to climb, reaching 10.5%.

In June 2021, inflation peaked at 6.16%, according to data from Saudi Arabia’s General Authority for Statistics (GASTAT).

Among the G20 nations, Saudi Arabia ranks third lowest in inflation rates, trailing behind Switzerland and Italy.

According to the World Bank’s latest report for the Middle East and North Africa, Saudi Arabia and Kuwait have managed to keep inflation in check through strict monetary policies and support for food and energy prices.

Recent data from GASTAT shows that housing and utility prices went up by 8.8%, while food and drink prices rose by 0.9%. However, transportation costs fell by 1.8%, and prices for miscellaneous goods and personal services increased by 1.1%.

Experts speaking to Asharq Al-Awsat say the Saudi government's measures have kept inflation lower compared to global economies.

Mohammed Bin Duleim Al-Qahtani, an economist at King Faisal University, pointed out that housing, rent, dining out, and electricity prices still affect inflation.

He believes the economy will grow, preventing major economic downturns over the next couple of years. Al-Qahtani also expected inflation to drop significantly by 2028.

Nasser Al-Quraowi, head of the Saudi Center for Studies and Research, said Saudi Arabia ranks among the top five countries in stable inflation despite global crises.

He emphasized the state’s role in protecting citizens and residents’ living standards, which will remain a priority for inflation control in the future.



Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
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Saudi Arabia Sees Highest Level of Non-oil Private Sector Activity in 4 Months

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)
The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders. (Asharq Al-Awsat)

Business activity in Saudi Arabia's non-oil sector accelerated to a four-month high in September, driven by strong demand, which led to faster growth in new orders. The Riyad Bank Saudi Arabia Purchasing Managers' Index (PMI), adjusted for seasonal factors, rose to 56.3 points from 54.8 in August, marking the highest reading since May and further distancing itself from the 50.0 level that indicates growth.

The 1.5-point increase in the PMI reflects a larger expansion in both output and new orders, alongside challenges in supply. The improvement in business conditions contributed to a significant rise in employment opportunities, although difficulties in finding skilled workers led to a shortage in production capacity.

At the same time, concerns over increasing competition caused a decline in future output expectations. According to the PMI statement, inventories of production inputs remained in good condition, which encouraged some companies to reduce their purchasing efforts.

Growth was strong overall and widespread across all non-oil sectors under study. Dr. Naif Al-Ghaith, Senior Economist at Riyad Bank, said that the rise in Saudi Arabia's PMI points to a notable acceleration in the growth of the non-oil private sector, primarily driven by increased production and new orders, reflecting the sector’s expansionary activity.

Al-Ghaith added that companies responded to the rise in domestic demand, which plays a crucial role in reducing the Kingdom's reliance on oil revenues. The upward trend also indicates improved business confidence, pointing to a healthy environment for increased investment, job creation, and overall economic stability.

He emphasized that this growth in the non-oil sector is particularly important given the current context of reduced oil production and falling global oil prices. With oil revenues under pressure, the strong performance of the non-oil private sector acts as a buffer, helping mitigate the potential impact on the country's economic conditions.

Al-Ghaith continued, noting that diversifying income sources is essential to maintaining growth amid the volatility of oil markets. He explained that increased production levels not only enhance the competitiveness of Saudi companies but also encourage developments aimed at expanding the private sector's participation in the economy.

This shift, he said, provides a more stable foundation for long-term growth, making the economy less susceptible to oil price fluctuations.