Saudi Arabia’s annual inflation rate slowed to 2.1% in July, down from 2.3% in June and below market expectations of 2.3%, official data showed on Thursday. It was the lowest reading since February.
Housing, water, electricity, gas and fuel prices remained the main driver of the increase, rising 5.6% year-on-year, propelled by a 6.6% jump in housing rents, the General Authority for Statistics said.
Analysts said the continued moderation in rent inflation — down from 7.6% in June — signaled progress in the government’s efforts to reform the property market and boost housing supply.
The data aligns with IMF forecasts that inflation in the kingdom will remain contained at around 2% in 2025 and 2026.
Other categories also saw increases, including food and beverages (up 1.6%), miscellaneous goods and services (4.3%), and restaurants and hotels (1.4%). Prices fell in furnishings and household equipment (-2%), clothing and footwear (-0.4%) and transport (-0.3%).
On a monthly basis, consumer prices were flat compared with June, as stability in transport, restaurants and hotels, clothing and footwear, health, communications and tobacco offset gains of 0.2% each in housing and in recreation and culture.
Abdullah al-Jassar, a member of the Saudi Association for Energy Economics, said he expected inflation to hold near current levels in 2025, with any potential interest rate cuts having limited impact.
He noted that housing-related costs, particularly rents, continued to exert strong upward pressure, with villa rents alone climbing 6.4% in July.
Imported inflation has pushed up the cost of some goods such as food and beverages, while declines in prices of other imports, including vehicles (-1.6%), have partly offset overall price pressures, al-Jassar added.
Financial and economic consultant Hussein al-Attas said the figures underscored the success of fiscal and monetary policies in containing inflation despite fluctuations in the prices of certain goods and services.
He said the rental sector remained the main inflation driver, while food prices and some consumer goods were showing signs of slower growth.
Inflation is expected to stay around 2% in the coming period, a level that supports purchasing power and investment appeal, al-Attas said, adding that authorities would continue to monitor global and domestic developments that could influence price trends.
