Inflation in Saudi Arabia edged down to its lowest rate in four years in 2011 as lower rents and food prices more than offset a rise in other components of the consumer price index, a key Saudi investment firm said on Tuesday.
The Riyadh-based Jadwa put total inflation in the world’s oil powerhouse at five per cent in 2011, down from 5.3 per cent in 2010 and 5.1 per cent in 2009. The rate hit a record annual high of 9.9 per cent in 2008.
“Annual average inflation for 2011, at five per cent, was little changed from the previous two years. Inflation for food and rent (the largest components of the cost of living index) slowed, offsetting rises in most other categories,” Jadwa said in its monthly inflation report sent to Emirates 24/7.
A breakdown showed housing and related items shrank to 7.8 per cent in 2011 from 9.5 pr cent in 2010 to maintain a downward trend since 2008, when it climbed to an all time high of 17.5 per cent before falling to 14.1 per cent in 2009. Food and beverages prices also slipped to 5.2 per cent last year from 6.2 per cent in 2010 after surging from two per cent in 2009.
Home furniture prices dipped to 0.5 per cent from 2.8 per cent while inflation in transport and telecommunications grew to 2.1 from 1.1 per cent and in other expenses and services to 8.9 from 7.4 per cent.
Inflation rates in all Gulf oil producers peaked in 2008 because of strong domestic demand due to high oil prices, a surge in rents and food prices and a weakening in the US dollar, to which most of their currencies are pegged.
The rate tumbled in the following years in most regional countries but remained relatively high in Saudi Arabia because of high rents.