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Saudi king demands inflation policy
Saudi Arabia's king told the country's economic planning authorities that achieving economic growth must go hand in hand with the protection of people's purchasing power, the state news agency reported yesterday.
King Abdullah's instructions made during a cabinet meeting came after inflation surged to decade-highs in 2007, raising calls for government intervention to ease cost of living rises.
"(The king) instructed bodies in charge of economic and financial planning to give priority ... to achieving economic growth while protecting citizens' living standard and the purchasing power of citizens' income," state news agency SPA quoted a cabinet statement as saying.
The statement did not give further details.
Inflation in the world's largest oil exporter is widely expected to continue rising in 2008 after it reached 5.35% in October, its highest level since at least 2005.
This has been mainly due to the global surge in the prices of commodities and the US dollar weakness.
A source familiar with Saudi currency policy told newswire Reuters in November that the kingdom could consider revaluing the currency, which the central bank has kept stable at 3.75 to the dollar since June 1986.
King Abdullah ordered last month subsidies on imported rice and baby milk to ease the impact of inflation on ordinary Saudis.
Last month a group of Muslim clerics issued a rare warning to leaders that they must take action to curb the rising inflation, which has prompted public anger.
Members of the king's advisory council, the Shura, called in October for a national wage hike to compensate for inflation.
In Internet forums, where they can anonymously express their views, Saudis have blamed the US-allied government's insistence on pegging the riyal to the US dollar. (Reuters)
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Posted by Ali Aboucham on 8 January 2008 at 15:41 UAE time
The closure of local markets due to the removal of subsidies does not guarantee that the importer will not raise his or her prices. The importer may also be subsidised.
In the short term the importer can simply enter the market with low prices and wait for competition to decrease then raise prices. If locals cannot compete then they can simply buy the importers' business, that way the money stays here.
Posted by muhammad razwan, Magusa, north cyprus on 8 January 2008 at 15:18 UAE time
I'm not a governament critic but the Saudi government is too silent when it comes to the US Dollar. If they can't jump to the Euro from the dollar in oil transactions then at least they should revalue the Riyal.
They should use the tools to handle the inflation problem in the country.
Posted by Hussain, Al Khobar, Saudi Arabia on 8 January 2008 at 08:50 UAE time
No matter how much this issue is raised, nothing is ever truly done while neighboring gulf states increase pay generously.
People are starting to take action into their own hands.
Just this morning i got an email stating a boycott on all local dairy manufacturers. (I still don't understand how local cows are related to the dollar and global increase in commodities.
I don't blame the government, their doing all they can in light of the circumstances. What I do blame are the hypocrites calling hiding behind "consumer protection". Yes, consumer protection that is as effective as a dead camel in slow motion.