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Inflation hits 3.1% in Saudi

Inflation in Saudi Arabia rose to 3.1% in June from 2.96% in May, according to figures from the Central Department of Statistics.

The department said the cost of living index reached 104.4 points in June. It gave no comparative figures for the month of June 2006.
According to the central bank's website, the index reached 101.3 points in June 2006.

It is the third consecutive month inflation has risen in the kingdom, after dropping in March for the first time in nine months.

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

Saudi Arabia is one of five Gulf states that has its currency linked to the US dollar, the value of which has plummeted against other major global currencies.

This has pushed up the cost of imports from places such as Europe and is one of the reasons behind Kuwait’s decision back in May to ditch its dollar peg and replace it will a basket of currencies in order to control inflation.

Rising inflation will keep pressure on the Saudi government to revalue its riyal against the dollar.

Saudi Arabia's central bank has repeatedly ruled out changing foreign exchange policy, and earlier this month said the current level of inflation was no cause for concern.

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