Saudi Arabia’s annual inflation fell to 2% in August from 2.3% in the previous month, official data showed Thursday, despite higher rents and food prices.
Actual rents for housing rose by 10.8% in August, reflecting a 22.5% surge in rents for apartments, said a report from the Saudi General Authority for Statistics (GASTAT).
Higher rents in Saudi Arabia were the main driver of the inflation rate in August due to their high relative weightage of 21% in the Saudi consumer basket.
Food and beverage prices edged up by 0.4%, while transport costs rose by 0.5%.
Restaurant and hotel prices increased by 2.7% due to the rise in catering services prices by 2.1%.
Likewise, education costs moved up by 1.8%, mainly resulting from the increase in tertiary education prices by 5.5%. In contrast, prices of furnishings, household equipment, and maintenance prices dropped by 3.2% due to a dip in furniture and furnishings, carpets, and other floor coverings by 4.6%. Clothing and footwear prices dropped by 4.2% due to the decrease in garment prices by 6.2%, data showed.
On a month-on-month basis, consumer prices remained stable in August, marking a slight 0.03% increase. Saudi economy The Saudi economy grew by 1.2% year-on-year in the second quarter, with the non-oil sector continuing to drive growth in the Gulf state, official estimates showed.
In comparison, Saudi Arabia’s economy recorded a 3.8% year-on-year growth for the first three months of the year, buoyed by the strong non-oil sector.
Saudi Arabia’s gross domestic product (GDP) growth was driven by a 6.1% surge in non-oil economic activities and 2.3% in government services activities in the second quarter, offsetting the 4.3% plunge in oil activities, according to estimates by the General Authority for Statistics (GASTAT).
The new reading came just slightly higher than GASTAT's second-quarter flash estimates of a 1.1% growth released on July 31.
However, on a seasonally adjusted basis, Saudi’s real GDP during the April-June period plunged by 0.2% compared to the first quarter. GASTAT attributed the decline to a 1.5% drop in oil activities despite a 1.6% and 0.5% quarter-on-quarter increase in non-oil and government services-related activities, respectively.
Saudi’s non-oil business activity rose to 59.6 in June, according to the Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) survey by S&P Global last month. However, the pace of expansion slowed in July and August, with PMI dropping to 57.7 and 56.6, respectively.
