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) 
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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.

 

 

 



Gold Falls as Higher Treasury Yields, Fed Rate Hike Bets Weigh

Gold bracelets and necklaces displayed for sale in a gold shop at Istanbul's Grand Bazaar (AFP)
Gold bracelets and necklaces displayed for sale in a gold shop at Istanbul's Grand Bazaar (AFP)
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Gold Falls as Higher Treasury Yields, Fed Rate Hike Bets Weigh

Gold bracelets and necklaces displayed for sale in a gold shop at Istanbul's Grand Bazaar (AFP)
Gold bracelets and necklaces displayed for sale in a gold shop at Istanbul's Grand Bazaar (AFP)

Gold fell for a third consecutive session on Wednesday, as rising US Treasury yields and growing bets that the Federal Reserve will raise interest rates pressured the non-yielding metal.

Spot gold was down 0.8% at $3,974.75 per ounce as of 0849 GMT, after touching its lowest level since last November at $3,942.99 in the previous session. US gold futures for August delivery lost 1.3% to $3,987.70/oz.

The yellow metal ‌on Tuesday recorded ‌its first quarterly loss since January 2024, Reuters reported.

A selloff ‌in ⁠US Treasuries on ⁠Tuesday pushed the benchmark 10-year yield up as much as 9 basis points before it backed off the highs. By Wednesday, yields were rising again, up 4 bps at 4.465%, outpacing increases in euro zone bond yields.

A stronger US dollar makes bullion less affordable for overseas buyers.

"The weakness is a bit driven by comments from ⁠Fed's Hammack, suggesting a rate hike might be ‌needed and market participants pricing in ‌a bit more rate hikes for this year," said UBS analyst Giovanni Staunovo. Federal ‌Reserve Bank of Cleveland President Beth Hammack said on Tuesday ‌she may advocate for higher rates if inflation pressures don’t moderate. According to CME FedWatch tool, traders see a nearly 67% chance of a rate hike by September.

Expectations for more hikes are not helping investment demand, and ‌ETF holdings have seen renewed outflows in recent days, said Staunovo, noting that price volatility is ⁠expected around economic ⁠data releases this week.

June ADP employment data, due at 1215 GMT, and Thursday's nonfarm payrolls report could give further clues on the Fed's policy path.

Markets will also closely watch the European Central Bank's annual Sintra conference on Wednesday, where Fed Chair Kevin Warsh and ECB President Christine Lagarde are due to speak. On the geopolitical front, concerns persisted over the prospects for US-Iran diplomacy after Tehran said it would not meet senior US envoys who travelled to the region following the recent outbreak of hostilities.

Spot silver fell 1.4% to $57.75 per ounce.

Platinum slipped 0.6% to $1,542.70, after hitting its lowest point since November. Palladium slid 1.4% to $1,187.01.


Turkish Manufacturing Contracts, Hit by Iran War Disruption, PMI Shows

 A full moon rises over the Galata Tower in Istanbul, Türkiye, June 29, 2026. (Reuters)
A full moon rises over the Galata Tower in Istanbul, Türkiye, June 29, 2026. (Reuters)
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Turkish Manufacturing Contracts, Hit by Iran War Disruption, PMI Shows

 A full moon rises over the Galata Tower in Istanbul, Türkiye, June 29, 2026. (Reuters)
A full moon rises over the Galata Tower in Istanbul, Türkiye, June 29, 2026. (Reuters)

Türkiye's manufacturing ‌sector contracted in June as the war in the Middle East disrupted demand and supply, a business survey showed on Wednesday.

The Istanbul Chamber of Industry's Türkiye Manufacturing Purchasing Managers' Index, compiled by S&P Global, fell to 47.1 in June from 49.8 in May. The 50-mark separates growth from contraction.

Output returned to decline after rising slightly in May, with firms ‌citing market uncertainty ‌linked to the conflict ‌in ⁠the Middle East, softer ⁠new orders and higher prices.

Demand weakened further, with total new orders posting a solid decline and new export business also falling again after expanding in May.

Companies also cut purchasing activity, while employment continued to be scaled ⁠back. Suppliers' delivery times lengthened again, although ‌the deterioration was ‌the least marked since February.

There were some signs ‌of easing price pressures. Input cost inflation slowed ‌for a second straight month to its weakest since November, while output price inflation eased to its lowest level so far this year.

The June ‌survey reversed some of May's improvement and extended the sector's downturn to ⁠27 ⁠consecutive months. Firms also reduced stocks of purchases and finished goods amid muted demand conditions, the panel showed.

"The Turkish manufacturing sector took a step back in June, posting a renewed softening of production amid muted new orders. Anecdotal evidence from the survey indicated that the war in the Middle East continued to be the principal cause of the challenges facing firms," said Andrew Harker, economics director at S&P Global Market Intelligence.


Oil Edges Higher as Breakdown in Iran-US Talks Raises Supply Concerns

FILE PHOTO: A pumpjack, used to help lift oil from a well, in the Permian basin near Midland, Texas, US, October 8, 2025. REUTERS/Arathy Somasekhar/File Photo
FILE PHOTO: A pumpjack, used to help lift oil from a well, in the Permian basin near Midland, Texas, US, October 8, 2025. REUTERS/Arathy Somasekhar/File Photo
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Oil Edges Higher as Breakdown in Iran-US Talks Raises Supply Concerns

FILE PHOTO: A pumpjack, used to help lift oil from a well, in the Permian basin near Midland, Texas, US, October 8, 2025. REUTERS/Arathy Somasekhar/File Photo
FILE PHOTO: A pumpjack, used to help lift oil from a well, in the Permian basin near Midland, Texas, US, October 8, 2025. REUTERS/Arathy Somasekhar/File Photo

Oil prices ticked higher on Wednesday on concerns a breakdown in talks between Iran and the US for a final agreement to end their war may extend supply disruptions in the key Middle East producing region.

Brent futures rose 14 cents, or 0.19%, to $73.09 a barrel at 0644 GMT, while US West Texas Intermediate (WTI) crude was up 11 cents, or 0.16%, to $69.61 a barrel, Reuters said.

"Hormuz continues to reopen but it's patchy, unpredictable, and not fully transparent,” said Vandana Hari, founder ‌of oil market analysis ‌provider Vanda Insights.

"Unless there is a fresh understanding ‌between ⁠Washington and Tehran, the ⁠market may wait and watch for sustained peace and quiet before crude resumes bearish momentum."

US President Donald Trump's son-in-law Jared Kushner and envoy Steve Witkoff arrived in Doha for what the White House described as "high level" talks on Tuesday, but Iran and host Qatar said they would meet with mediators, rather than the Iranians themselves.

Qatar said Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani was among those to meet with ⁠Witkoff and Kushner. Brent fell by around $45 a barrel in ‌the second quarter of this year, its largest ‌quarterly loss since the global financial crisis in 2008. US crude futures meanwhile fell by ‌around $31, their largest quarterly loss since 2020, when the COVID-19 pandemic crushed global oil ‌demand.

The declines followed progress toward ending the Middle East conflict, after sharp gains in March triggered by the outbreak in hostilities.

Analysts have cut their 2026 oil price forecasts for the first time since the Iran war began, after five straight monthly increases, as the ‌reopening of the Strait of Hormuz eased concerns over prolonged supply disruptions, a Reuters poll showed on Tuesday.

US Vice President ⁠JD Vance said ⁠Iran would be prevented from charging tolls through the strait, telling The Michael Knowles Show, "This is not going to end in a place where the Iranians are collecting tolls on ships going through the Strait of Hormuz."

Tanker traffic through the critical waterway has started to recover, with Vance claiming that oil flows through the strait had been restored to pre-war levels.

Meanwhile, US crude oil inventories fell again last week while gasoline stocks also declined, market sources said, citing data from the American Petroleum Institute released on Tuesday.

Crude stocks fell by 6.1 million barrels in the week ended June 26, the sources said on condition of anonymity.

Official US oil stock data from the Energy Information Administration will be released at 10:30 a.m. EDT (1430 GMT) on Wednesday.