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.

 

 

 



Riyadh Air Launches ‘Employment First’ Overseas Aviation Training Scholarship Program

Riyadh Air Launches ‘Employment First’ Overseas Aviation Training Scholarship Program
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Riyadh Air Launches ‘Employment First’ Overseas Aviation Training Scholarship Program

Riyadh Air Launches ‘Employment First’ Overseas Aviation Training Scholarship Program

Riyadh Air has announced its ‘Employment-First’ Overseas Scholarship Program, which aims to launch several scholarship tracks, starting with two specialized paths for engineers in Australia, followed by a pilot training program in the United States.

The initiative falls under ‘Promising Path’, one of the tracks within the Custodian of the Two Holy Mosques Scholarship Program, in collaboration with the Ministry of Education, the Ministry of Transport and Logistic Services, and the General Authority of Civil Aviation (GACA).

This strategic step aims to build national competencies and train a new generation of specialists in the aviation sector, SPA reported.

According to a recent press release from Riyadh Air, the program will introduce several global training pathways, with the initial phase focusing on sending scholarship students to Australia to study towards Bachelor’s degrees in Aircraft Maintenance Engineering, covering both Mechanical Engineering and Avionics (Electronics). Next month, Riyadh Air will launch a Commercial Aviation training program in the United States.

In line with Riyadh Air’s commitment to supporting students' career progression, participants will be employed before commencing their scholarships. This ensures that their years of experience are registered with the General Organization for Social Insurance, enhancing their professional readiness from day one.

The program's launch is part of Riyadh Air’s continuous efforts to empower national talent and provide the Kingdom’s young and vibrant workforce with essential skills and knowledge, representing an even greater long-term investment in the future of the Kingdom's aviation industry.

Vice President of Talent Acquisition and Business Partners at Riyadh Air Nahar Aljahani stated: "The 'Employment-First' Scholarship Program is a part of our commitment to developing national human capital and enabling Saudi youth - both men and women - to access world-class education.

Its impact will reflect positively on the development of the aviation sector in the Kingdom, contributing to the company's goal of creating over 200,000 direct and indirect jobs."

With these programs, Riyadh Air continues to play a part in building a promising future for Saudi citizens and enhancing the competitiveness of our graduates in the global aviation industry.


Japan PM Reassures Markets with Fiscal Discipline in Next Year’s Budget

Japan's Prime Minister Sanae Takaichi delivers a speech at the 14th Council Meeting of the Japan Business Federation, or Keidanren, in Tokyo on December 25, 2025. (AFP)
Japan's Prime Minister Sanae Takaichi delivers a speech at the 14th Council Meeting of the Japan Business Federation, or Keidanren, in Tokyo on December 25, 2025. (AFP)
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Japan PM Reassures Markets with Fiscal Discipline in Next Year’s Budget

Japan's Prime Minister Sanae Takaichi delivers a speech at the 14th Council Meeting of the Japan Business Federation, or Keidanren, in Tokyo on December 25, 2025. (AFP)
Japan's Prime Minister Sanae Takaichi delivers a speech at the 14th Council Meeting of the Japan Business Federation, or Keidanren, in Tokyo on December 25, 2025. (AFP)

Japanese Prime Minister Sanae Takaichi sought on Thursday to ease market concerns over her expansionary fiscal policy, saying the government's draft budget maintains discipline by limiting reliance on debt.

There has been growing investor unease about fiscal expansion under Takaichi's administration, which has driven super-long government bond yields to record highs and weighed on the yen.

The budget for the year starting in April, to be finalized on Friday and submitted to parliament early in 2026, ‌will total 122.3 trillion ‌yen ($785.4 billion), Takaichi told ruling coalition executives.

The huge ‌spending ⁠will come ‌on top of a 21.3 trillion-yen stimulus package, compiled in November and funded by a supplementary budget for the current fiscal year, that focused on cushioning the blow to households from rising living costs.

Despite the record size, new government bond issuance for the next fiscal year will be capped at 29.6 trillion yen, staying below 30 trillion yen for a second straight year, ⁠she said.

The reliance on debt will fall to 24.2% from 24.9% in the initial fiscal 2025 ‌budget, which dipped below 30% for the ‍first time in 27 years, she said. ‍The 24.2% debt dependence ratio would be the lowest since 1998.

"We ‍believe this draft budget strikes a balance between fiscal discipline and achieving a strong economy while ensuring fiscal sustainability," Takaichi said.

In a separate speech at Japanese business lobby Keidanren, Takaichi said that her "responsible, proactive" fiscal policy means strategic spending with a long-term perspective.

"It does not mean expanding expenditures indiscriminately based solely on scale," she said.

In a report to clients, Yusuke Matsuo, ⁠Mizuho Securities' senior market economist, said Takaichi would still need to promote proactive fiscal spending to avoid alienating her political base. He added that financial markets could be reassured if the government sticks to a less aggressive stance on spending.

Signaling a shift in the government's reflationary policy push, private-sector members of a government panel on Thursday called on the government to clearly show the public how the debt-to-gross domestic product ratio can be steadily reduced under Takaichi's government.

The four private-sector members include former Bank of Japan Deputy Governor Masazumi Wakatabe and economist Toshihiro Nagahama - known as reflationist aides of Takaichi.

Their proposals were discussed at ‌the Council on Economic and Fiscal Policy (CEFP), which oversees Japan's fiscal blueprint and long-term economic policies.


Asian Shares are Mixed after US Stocks Drift to More Records

Currency dealers monitor exchange rates as a screen (R) shows South Korea's benchmark stock index in a foreign exchange dealing room at the Hana Bank headquarters in Seoul on November 5, 2025. (Photo by Jung Yeon-je / AFP)
Currency dealers monitor exchange rates as a screen (R) shows South Korea's benchmark stock index in a foreign exchange dealing room at the Hana Bank headquarters in Seoul on November 5, 2025. (Photo by Jung Yeon-je / AFP)
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Asian Shares are Mixed after US Stocks Drift to More Records

Currency dealers monitor exchange rates as a screen (R) shows South Korea's benchmark stock index in a foreign exchange dealing room at the Hana Bank headquarters in Seoul on November 5, 2025. (Photo by Jung Yeon-je / AFP)
Currency dealers monitor exchange rates as a screen (R) shows South Korea's benchmark stock index in a foreign exchange dealing room at the Hana Bank headquarters in Seoul on November 5, 2025. (Photo by Jung Yeon-je / AFP)

Asian shares were mixed Thursday in thin holiday trading, with most markets in the region and elsewhere closed for Christmas.

In Tokyo, the Nikkei 225 edged 0.1% higher to 50,407.79. It has gained nearly 30% this year.

The dollar slipped to 155.85 Japanese yen from 155.94 yen. The euro climbed to $1.1786 from $1.1780.

Markets in mainland China advanced, with the Shanghai Composite index up 0.5% at 3,959.62. Hong Kong's exchange was closed, The Associated Press said.

Investors were encouraged by a statement by the People’s Bank of China, China’s central bank, promising to ensure adequate money supply to support financing, economic growth and inflation targets. Earlier in the week, the PBOC had opted to keep its key short-term lending rates unchanged.

Shares fell in Thailand and Indonesia.

On Wednesday, the S&P 500 index rose 0.3% to 6,932.05 and the Dow Jones Industrial Average added 0.6% to close at 48,731.16. The Nasdaq composite added 0.2% to 23,613.31

Trading was extremely light as markets closed early for Christmas Eve and will be closed for Christmas on Thursday. US markets will reopen for a full day of trading on Friday, though volumes will likely remain light this week with most investors having closed out their positions for the year.

The S&P 500 is up more than 17% this year, as investors have embraced the deregulatory policies of the Trump administration and been optimistic about the future of artificial intelligence in helping boost profits for not only technology companies but also for Corporate America.

Much of the focus for investors for the next few weeks will be on where the US economy is heading and where the Federal Reserve will move interest rates. Investors are betting the Fed will hold steady on interest rates at its January meeting.

The US economy grew at a surprisingly strong 4.3% annual rate in the third quarter, the most rapid expansion in two years, driven by consumers who continue to spend despite strong inflation. There have also been recent reports showing shaky confidence among consumers worried about high prices. The labor market has been slowing and retail sales have weakened.

The number of Americans applying for unemployment benefits fell last week and remain at historically healthy levels despite some signs that the labor market is weakening.

US applications for jobless claims for the week ending Dec. 20 fell by 10,000 to 214,000 from the previous week’s 224,000, the Labor Department reported Wednesday. That’s below the 232,000 new applications forecast of analysts surveyed by the data firm FactSet.

Dynavax Technologies soared 38.2% after Sanofi said it was acquiring the California-based vaccine maker in a deal worth $2.2 billion. The French drugmaker will add Dynavax’s hepatitis B vaccines to its portfolio, as well as a shingles vaccine that is still in development.

Novo Nordisk's shares rose 1.8% after the weight-loss drug company got approval from US regulators for a pill version of its blockbuster drug Wegovy. However, Novo Nordisk shares are still down almost 40% this year as the company has faced increased competition for weight-loss medications, particularly from Eli Lilly. Shares of Eli Lilly are up 40% this year.

US crude oil closed at $58.35 a barrel and Brent crude finished at $61.80 a barrel.