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Consumer relief as gov't unveils food subsidies

Saudi Arabia’s King Abdullah on Saturday intervened directly in the kingdom’s war on inflation, ordering the government to pay subsidies on two major food items to ease consumer concerns about the rising cost of goods.

Saudi finance minister Ibrahim Al-Assaf said the government will pay 1,000 Saudi riyals ($266) in subsidies for each metric tonne of rice, and will increase the subsidy for baby milk sixfold from 2 riyals to 12 riyals, the official Saudi Press Agency (SPA) reported.
SPA did not give any further details about the subsidies or when they would come into effect.

International rice prices have risen 8.7% since the beginning of the year, according to the UN Food and Agriculture Organisation (FAO).

Saudi Arabia is the largest importer of rice in the Middle East. The kingdom imported little under half of India’s total rice exports of 1.01 million tonnes in 2006-2007, while the rest of West Asia imported 291,000 tonnes, according to data from India’s Directorate General of Commercial Intelligence and Statistics (DGCIS).

The Saudi government is also looking at raising public sector wages to fight inflation, which accelerated to 4.8% in September, the highest level in at least a decade.

State employees are expected to receive a 30% salary increase, with a decision set to be issued shortly, according to a report by Arabic news channel Al-Arabiya.

The news follows reports last week that several high-profile Saudi companies such as Saudi Aramco and Mobily plan to raise wages by 15-40%.

Saudi Arabia is just the latest Gulf Arab state to look at hiking public sector wages as part of efforts to limit the impact of inflation.

Kuwaiti MPs approved a draft law last week urging the government to raise public and private sector wages for employees earning less than $6,385.

Bahrain has approved calls for a 15% hike for government employees, and the UAE recently announced it will raise public sector wages by 70%.

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