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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)
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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.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.