Saudi inflation at 12-year high

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SKY HIGH: Inflation in the kingdom hit a 12-year high in November. (Getty Images)

Saudi annual inflation hit 6% in November, the highest since at least 1995, giving the world's top oil-exporter negative interest rates, data showed on Wednesday.

Inflation in the largest Arab economy accelerated for the seventh straight month in November, rising from 5.35% in October, with its central bank facing the prospect of matching more US rate cuts.

The central bank is constrained in the fight against inflation by the riyal currency's peg to the dollar, which forces it to track US monetary policy at a time when the US Federal Reserve is cutting interest rates.

Inflation was spurred by a 15.4% jump in rents in November, the Central Department of Statistics said in a statement. Rents rose 11.7% in the year to October 31.

Food price inflation was steady in November at 7.5%.

Average inflation in Saudi Arabia could rise to 4.1% in 2008 from 3.8% in 2007, a poll by newswire Reuters showed last month.

Saudi Arabia's benchmark repurchase rate is 5.5%.

A majority of Wall Street firms expect the Fed to lower borrowing costs by 50 basis points at a policy meeting later this month, a Reuters poll showed on Friday.

The riyal hit a 21-year high last year when the Saudi central bank initially declined to match a Fed cut in September, firing speculation that the kingdom would sever its dollar peg.

The central bank says it has no plans to change currency policy and has since matched every Fed move by cutting some rates. (Reuters)

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