RIYADH — Inflation in Saudi Arabia remained steady at 1.6% year-on-year in May, marking the third consecutive month at this rate, according to data from the General Authority for Statistics. The Consumer Price Index (CPI), released on Sunday, indicated that residential rents were the biggest contributor to inflation in the Kingdom during May, with a 10.5% increase compared to the same month last year. This rise was primarily due to a 14.3% increase in apartment rents. Consequently, the prices of the largest category within the index — housing, water, electricity, gas, and other fuels — increased by 8.7% year-on-year and 0.4% from April. Food and beverage prices rose by 1.4%, influenced by a 6.9% increase in vegetable prices. The restaurants and hotels category saw a 2.5% rise, driven by a 1.9% increase in food service prices. In contrast, the furnishings, household equipment, and maintenance category experienced a 3.8% decrease, affected by a 5.8% drop in the prices of furniture, carpets, and other floor coverings. The clothing and footwear category also declined by 4%. On a monthly basis, the CPI showed a slight increase of 0.2% in May compared to April, also driven by a 0.5% rise in residential rents. The International Monetary Fund (IMF) noted in an earlier statement at the conclusion of the Article IV consultation mission for Saudi Arabia that inflation remains contained and has slowed rapidly despite some pressure points. The IMF reported that after peaking at 3.4% year-on-year in January 2023, inflation fell to 1.6% in April 2024, driven by the appreciation of the nominal effective exchange rate. The statement added that rent prices are rising at around 10%, due to the influx of foreign workers and major redevelopment plans in Riyadh and Jeddah. Recently, wholesale prices have also increased, reflecting higher input costs, with some increase in skilled labor wages observed to date. The IMF expects inflation to remain steady at 1.9% in 2024. The Saudi Ministry of Finance has forecasted a decrease in inflation rates to 2.2% in 2024.
