Cost of living rises in Saudi

Inflation in Saudi Arabia rose for a second consecutive month in May to 2.96% as food and housing costs climbed, the central bank said on Tuesday.

Inflation has been gaining this year as windfall oil revenues boosted Saudi Arabia's economy, increasing demand for housing.

The component of the consumer price index tracking the cost of home renovation, rent, fuel, and water was up 6.5% compared with the end of May, 2006.

Prices of food and beverages gained 5.8%.

Food prices were main reason driver of inflation in April, when inflation was 2.9%.

The annual inflation rate dropped for the first time in nine months when it slipped to 2.86% in March from 3% in February.

John Sfakianakis, chief economist at SABB bank said at the time food costs were rising this year because some wholesalers were taking advantage of an unusually cold winter to increase the prices of vegetables.

Central bank governor Hamad Saud al-Sayyari has linked inflation to factors such as state spending and property prices.

The riyal currency's peg to the U.S. dollar had little impact on prices, he said last month.

The dollar fell to a record low against the euro in April driving up the cost of some Saudi imports.

Finance Minister Ibrahim al-Assaf said in May the kingdom would control government spending to limit inflation.

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