Saudi Arabia's January inflation rises to 5.7% on food prices, VAT effect
Saudi Arabia’s annual inflation rate rose to 5.7 percent year-on-year in January compared with 5.3 percent y-o-y in December, driven mainly by higher food and transportation prices.
The Saudi General Authority for Statistics also noted on Tuesday that consumer prices still reflected the VAT increase from 5 percent to 15 percent in July 2020.
On a monthly basis, consumer prices were up by 0.2 percent in January.
The Food and Beverages index saw the highest annual increase of 12.3 percent, mainly due to the 12.6 percent rise in food prices, particularly meat and vegetables. Food accounts for 20 percent of the CPI basket.
In addition, communication services prices jumped 13.8 percent, while transport prices rose 9.6 percent, offsetting a decline in prices for housing, water, electricity and gas.
The London-based consultancy Capital Economics, said: “Looking forward, we think that inflation will rise a bit further over the first half of this year, peaking at around 6.5 percent y-o-y, as the effects of the higher global food prices and the rally in oil prices continue to filter through. But the headline rate will drop sharply from July as the effects of last year’s VAT hike drop out of the annual price comparison.”
