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Saudi Arabia’s Annual Inflation Slows to 6pc

RIYADH - Saudi Arabia’s annual inflation rate slowed to 6 per cent in March from 6.9 per cent in February due mainly to a decline in food price growth and local demand as the global economy slows.

Saudi Arabia’s cost of living index rose to 121 points by March 31 compared with 114.2 points a year earlier, the Central Department of Statistics said on its website. “Inflation is falling fast in Saudi Arabia and this ... is set to continue as it continues to benefit from global deflation,” said John Sfakianakis, chief economist at SABB bank, HSBC’s Saudi affiliate.

“Given the downward pressure, inflation could average ... around 5 per cent in 2009.” The annual inflation in food and drink prices eased to 2.8 per cent in March from 4.6 per cent in February, but that of residential rents stabilised at 20 per cent in March.

“Rents are not declining fast enough as a consequence of a slow expansion in the construction of residential buildings and the overall shortage of housing,” Sfakianakis said. Inflation in the world’s top oil exporter peaked at more than 11 per cent in July 2008, the same month that saw oil hit a record price of
 $147 a barrel.

Oil prices have since tumbled to around a third 
of that level .