Saudi inflation maintained its downward trajectory in February for the second month in a row, albeit at a slower pace this time, official data showed.

 

Consumer prices in the kingdom fell 0.1 percent last month from a year earlier.

 

In January, prices fell 0.4 percent, their first drop in more than a decade. 
 
In February, Food inflation, which accounts for 20 percent of the CPI basket,fell 3.4 percent last month, while the housing and utilities basket gained.
 

London-based consultancy Capital Economics attributed the weakness of price pressures at the start of 2017 to a steep drop in food prices and unwinding of last year’s subsidy cuts. Food products account for almost a third of the CPI basket.

 

“We expect inflation to return to positive territory soon, before jumping in the middle of the year once the new subsidy cuts have been implemented,” CE said.

 

A fresh round of subsidy cuts is expected in mid-2017 and a value-added tax is to come into force in the kingdom by 2018.

 

Saudi Inflation (2016-2017)

Month

Inflation rate

January 2016

4.3%

February

4.2%

March

4.3%

April

4.2%

May

4.1%

June

4.1%

July

3.8%

August

3.3%

September

3.0%

October

2.6%

November

2.3%

December

1.7%

January 2017

(0.4%)

February 2017

(0.1%)

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