Housing, Utilities and Fuel Drive Inflation Index in Saudi Arabia

People shop at a supermarket in Saudi Arabia. (Asharq Al-Awsat)
People shop at a supermarket in Saudi Arabia. (Asharq Al-Awsat)
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Housing, Utilities and Fuel Drive Inflation Index in Saudi Arabia

People shop at a supermarket in Saudi Arabia. (Asharq Al-Awsat)
People shop at a supermarket in Saudi Arabia. (Asharq Al-Awsat)

Saudi Arabia’s inflation rate increased to 2% in November, the highest in 15 months. The rise was driven primarily by a 9.1% increase in housing, water, electricity, gas, and other fuel prices, alongside a 2.7% rise in prices for miscellaneous goods and personal services. In contrast, transportation costs fell by 2.5%.

Despite the increase, Saudi Arabia remains the G20 nation with the lowest inflation rate, a level economists describe as relatively moderate.

According to the Consumer Price Index report published by the General Authority for Statistics (GASTAT) on Sunday, the housing, water, electricity, gas, and other fuel category saw a 9.1% rise, which was mainly due to a 10.8% surge in residential rents.

Housing costs significantly influenced overall inflation, as this category accounts for 25.5% of the consumer basket. Similarly, prices for miscellaneous goods and personal services rose by 2.7%, driven by a 23.7% increase in the prices of jewelry, watches and antiques.

The restaurants and hotels category also experienced a 1.5% rise, fueled by a 5.9% increase in hotel and furnished apartment service costs. Meanwhile, education expenses increased by 1.1%, reflecting a 1.8% rise in tuition fees for middle and secondary schools.

Food and beverage prices rose slightly by 0.3%, primarily due to a 1.9% increase in the cost of meat and poultry.

Dr. Naif Al-Ghaith, Chief Economist at Riyad Bank, linked the 2% year-on-year inflation increase to economic shifts under Vision 2030, which aims to diversify Saudi Arabia’s economy and reduce reliance on oil.

According to Al-Ghaith, the housing and utilities sector was the primary contributor to inflation, with residential rent prices, particularly for apartments, increasing by 12.5%.

Moreover, the 2.7% increase in miscellaneous goods and personal services reflects changes in consumption patterns and rising demand for certain goods and services amid Saudi Arabia’s ongoing economic and social transformation.

In contrast, the transportation sector’s 2.5% decline helped offset inflationary pressures. Al-Ghaith attributed this decrease to improvements in transportation infrastructure and enhanced logistics efficiency, aligning with Vision 2030’s objectives to modernize the transport and logistics sectors.

Al-Ghaith noted that these inflationary changes are part of the Kingdom’s broader economic transformation. For instance, rising housing costs may indicate increased investment in real estate and improved living standards. Similarly, higher prices for personal goods and services reflect the economy’s diversification and the emergence of new industries.



Gulf Stock Markets Slip Amid Escalating Iran-Israel Conflict and Fed Policy Uncertainty

Traders monitor stock information displayed on screens at the Qatar Stock Exchange. (Reuters)
Traders monitor stock information displayed on screens at the Qatar Stock Exchange. (Reuters)
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Gulf Stock Markets Slip Amid Escalating Iran-Israel Conflict and Fed Policy Uncertainty

Traders monitor stock information displayed on screens at the Qatar Stock Exchange. (Reuters)
Traders monitor stock information displayed on screens at the Qatar Stock Exchange. (Reuters)

Major stock markets across the Gulf declined on Tuesday, as heightened geopolitical tensions between Iran and Israel weighed on investor sentiment and fueled concerns over regional stability. Investors also remained on edge ahead of a key interest rate decision by the US Federal Reserve.

Reports from Iranian state media described a series of explosions and intense anti-aircraft fire lighting up the skies over Tehran. Simultaneously, air raid sirens sounded in Tel Aviv following a barrage of Iranian missile launches.

Amid the growing tensions, US President Donald Trump, speaking after departing early from the G7 summit in Canada, urged civilians to evacuate the Iranian capital.

At the same time, markets are closely watching developments in Washington, where the Federal Reserve is set to begin a two-day policy meeting. The central bank is widely expected to keep interest rates unchanged, but investors are eagerly awaiting signals from Chair Jerome Powell on the future path of monetary policy, particularly any indications of upcoming rate cuts to support a slowing global economy.

Against this backdrop, Gulf equity markets ended the day mixed. Saudi Arabia’s benchmark Tadawul All Share Index slipped 0.41%, while the Abu Dhabi Securities Exchange lost 0.51%. Dubai’s main index was down 0.64%.

Other markets followed suit. Qatar’s index dropped 0.51%, Muscat’s bourse fell 0.33%, and Egypt’s EGX 30 posted the largest regional decline, falling 1.02% amid heightened investor anxiety.

However, a few markets bucked the trend. Kuwait’s exchange rose 0.65%, while Bahrain’s index gained 0.30%, supported by selective buying and relative insulation from the geopolitical fallout.