Saudi inflation to continue to rise - report

INFLATION GROWTH: Inflation in Saudi Arabia will continue to rise in the third quarter of 2008. (Getty Images)

Inflation in Saudi Arabia will continue to rise in the third quarter of 2008, but at a slower pace than in the previous period, the Saudi Arabian Monetary Agency (SAMA) said a report on Saturday.

The general cost of living index registered an annual rise of 10.5 percent in the second quarter of 2008, compared to the second quarter of 2007, SAMA said.

“In terms of external factors that feed domestic inflation level, the openness of the Saudi economy on the world makes it vulnerable to international economic conditions. Unfavorable economic circumstances in certain regions of the world have influenced the supply of food commodities and thus raised the prices of food products in general,” the report said.

According to SAMA’s statistics, there is a general trend indicating increased inflation rates in consumer prices for the year ending in June 2008, compared with the historical performance of inflation in the previous five years.

“Projections indicate a continued rise in the inflation rate during the third quarter of 2008 but at a slower pace than in the previous period,” the report said.

Inflation growth would slow due to the high inflation rates in the corresponding period of the previous year, and the expected starting effect of actions taken by the government through subsidizing some key food items and tax reductions, the report said.

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