Saudi Inflation Holds Steady in May as Rents Remain Key Driver

Aerial photo of the Saudi capital Riyadh (SPA) 
Aerial photo of the Saudi capital Riyadh (SPA) 
TT
20

Saudi Inflation Holds Steady in May as Rents Remain Key Driver

Aerial photo of the Saudi capital Riyadh (SPA) 
Aerial photo of the Saudi capital Riyadh (SPA) 

Saudi Arabia’s annual inflation rate remained stable at 2.2 percent in May 2025, maintaining a pace close to the 2.3 percent recorded in April. The continued stability in prices signals a relative balance in inflationary pressures, despite ongoing increases in housing costs.

This resilience comes amid global economic volatility, reflecting the effectiveness of Saudi Arabia’s fiscal and monetary policies, particularly in controlling energy and rental prices. The monthly Consumer Price Index (CPI) saw a slight uptick of just 0.1 percent.

According to the General Authority for Statistics (GASTAT), the annual inflation rate for May was driven primarily by rising housing-related costs. Prices in the housing, water, electricity, gas, and fuel sector increased by 6.8 percent compared to the same period last year. Food and beverage prices climbed by 1.6 percent, while personal goods and services saw a 4 percent rise.

Residential rents remained the most significant contributor to inflation, continuing their upward trend and exerting substantial influence on the general index. Despite this, the Kingdom’s inflation rate remains among the lowest in the G20.

Commenting on the data, Dr. Abdullah Al-Jassar, a member of the Saudi Association for Energy Economics, told Asharq Al-Awsat that Saudi Arabia’s inflation levels remain comparatively low on a global scale. He said the current rate reflects the flexibility and discipline of the national economy, noting that price increases have been modest and largely under control.

Al-Jassar attributed this to effective government policies that have helped shield both the market and consumers from external shocks.

He emphasized that the inflation observed is a result of real economic activity rather than external disruptions or internal imbalances. One of the most effective tools in curbing inflation, he said, has been the government’s decision to stabilize local energy prices, even as global oil prices surged. Since fuel plays a crucial role in the production, transport, and distribution of goods and services, this policy has prevented cost increases from spilling over into other sectors such as food, construction, and housing.

Al-Jassar described this approach as a “smart policy” that successfully absorbed global inflationary shocks before they reached the end consumer.

Although residential rents jumped 8.1 percent year-on-year, he noted that the rise was gradual and primarily driven by strong demand and limited supply. He also pointed out that the Saudi riyal’s peg to the US dollar has helped protect the economy from imported inflation and reduce the cost of importing goods.

Increased competition, tighter price monitoring, and the growing presence of e-commerce were also cited as factors contributing to market stability and limiting price manipulation across various sectors.

Looking ahead, Al-Jassar suggested inflation could see a slight increase in the second half of 2025, potentially rising to between 2.5 and 3 percent. He attributed this potential uptick to seasonal factors or changes in global commodity prices. Additionally, if the US Federal Reserve moves to cut interest rates, this could lead to looser monetary policy in Saudi Arabia, boosting liquidity and consumption—factors that might put upward pressure on prices. However, he stressed that there are currently no signs of any sharp or unexpected inflationary surges.

In April 2025, the inflation rate stood at 2.3 percent, also led by a 6.8 percent rise in housing and related costs. Food and beverages saw a 2.2 percent increase, while personal goods and services were up 3.5 percent.

Month-on-month data showed that while May’s CPI rose by just 0.1 percent, residential rents continued to rise, helping push housing-related prices up by 0.3 percent. Actual rents for residences alone increased by 0.4 percent. Food and beverages inched up by 0.1 percent, while personal goods and services rose by 0.5 percent. Tobacco prices edged up by 0.2 percent.

 

 

 



US Close to Several Trade Deals, Announcements to be Made in Next Days, Bessent Says

US Treasury Secretary Scott Bessent speaks to reporters at the US Capitol as Republican lawmakers struggle to pass US President Donald Trump’s sweeping spending and tax bill, on Capitol Hill in Washington, D.C., US, June 27, 2025. REUTERS/Elizabeth Frantz/File Photo
US Treasury Secretary Scott Bessent speaks to reporters at the US Capitol as Republican lawmakers struggle to pass US President Donald Trump’s sweeping spending and tax bill, on Capitol Hill in Washington, D.C., US, June 27, 2025. REUTERS/Elizabeth Frantz/File Photo
TT
20

US Close to Several Trade Deals, Announcements to be Made in Next Days, Bessent Says

US Treasury Secretary Scott Bessent speaks to reporters at the US Capitol as Republican lawmakers struggle to pass US President Donald Trump’s sweeping spending and tax bill, on Capitol Hill in Washington, D.C., US, June 27, 2025. REUTERS/Elizabeth Frantz/File Photo
US Treasury Secretary Scott Bessent speaks to reporters at the US Capitol as Republican lawmakers struggle to pass US President Donald Trump’s sweeping spending and tax bill, on Capitol Hill in Washington, D.C., US, June 27, 2025. REUTERS/Elizabeth Frantz/File Photo

The United States is close to clinching several trade deals ahead of a July 9 deadline when higher tariffs kick in, US Treasury Secretary Scott Bessent said on Sunday, predicting several big announcements in coming days.

Bessent told CNN's "State of the Union" the Trump administration would also send out letters to 100 smaller countries with whom the US doesn't have much trade, notifying them that they would face higher tariff rates first set on April 2 and then suspended until July 9.

"President Trump's going to be sending letters to some of our trading partners saying that if you don't move things along, then on August 1 you will boomerang back to your April 2 tariff level. So I think we're going to see a lot of deals very quickly," Bessent said.

Bessent denied that August 1 was a new deadline for negotiations. "We are saying this is when it's happening. If you want to speed things up, have at it. If you want to go back to the old rate, that's your choice," he told CNN, Reuters reported.

The US Treasury chief said the Trump administration was focused on 18 important trading partners that account for 95% of the US trade deficit. But he said there had been "a lot of foot-dragging" among countries in getting closure on a trade deal.

He declined to name countries that were close to a trade agreement, adding, "because I don't want to let them off the hook."

Trump has repeatedly said India is close to signing a deal and expressed hope that an agreement could be reached with the European Union, while casting doubt on a deal with Japan.

Since taking office, the US president has set off a global trade war that has upended financial markets and sent policymakers scrambling to guard their economies, including through deals with the US and other countries.

Trump on April 2 announced a 10% base tariff rate and additional amounts for most countries, some ranging as high as 50%. The news roiled financial markets, prompting Trump to suspend all but the 10% base rate for 90 days to allow more time for negotiations to secure deals, but the process has proven more challenging than expected.

That period ends on July 9, although Trump early on Friday said the tariffs could be even higher - ranging up to 70% - with most set to go into effect August 1.

Bessent, asked about the 70% rate, referred back to the April 2 list, but that did not include such high rates.