Saudi inflation rises to 11.1% in July

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ON THE UP: Inflation has continued to rise in Saudi Arabia in July, figures show. (Getty Images)

Annual inflation in Saudi Arabia accelerated to 11.1 percent in July, its highest level in at least 30 years, due mainly to increases in food and housing costs, official data showed on Monday.

The cost of living index for the largest Arab economy hit 117.3 points on July 31 compared with 105.6 points a year earlier, the Central Department of Statistics said in a statement.

Food and beverage costs advanced 16 percent in July compared with an increase of 15.8 percent in June while the rental index -- which includes rents, fuel and water -- soared 19.8 percent versus 18.7 percent in June. The rent index alone rose 23.7 percent.

Inflation is a key challenge across the Gulf Arab region, where currencies are pegged to the ailing dollar, as their economies surge on windfall revenues from oil that has been racing to record highs.

Analysts expect annual inflation to hit its peak towards the end of the third quarter which coincides with the end of Ramadan, the Muslim fasting month which sees a surge in both consumption and prices.

Saudi Arabia is the world's largest oil exporter and the region's most populous nation.

Monthly inflation in Saudi Arabia added 1.6 percent in July compared to June, when it reached an annual 10.6 percent. It hit 10.4 percent in May and 10.5 percent in April. In June, it added 0.5 percent month on month, after dropping 0.2 percent in May and adding 0.9 percent month on month in April.

The country has dismissed changing its foreign exchange regime and has instead raised public sector wages, sought to control money supply's growth while boosting subsidies for food and public services and curbing public spending.

Dollar pegs force the Gulf Arab states, bar Kuwait, to track the United States in cutting interest rates. With the dollar tumbling this year to record lows against the euro and a basket of major currencies, some imports have become more expensive. (Reuters)

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