Prices in Saudi Arabia have risen by 2.8 percent year-on-year so far in 2018 due to the introduction of VAT and utility and fuel price reform, according to new research.
Jadwa Investment, citing the latest General Authority for Statistics (GaStat) inflation release for April, also showed that prices rose by 2.6 percent year-on-year in the month, declining by 0.2 percent month-on-month.
Jadwa said food and beverages prices rose by 5.7 percent year-on-year in April, but declined by 0.9 percent month-on-month for the second time in a row.
Housing and utilities prices rose slightly by 0.5 percent in April year-on-year, despite a spike in fuel prices in January, Jadwa noted, adding that housing rents, which have been showing negative growth rates since July 2017, weighed on this segment.
The research also said that after a decline in January, annual growth in point of sale retail sales have rebounded, with the average year-to-date rise of 13 percent, compared to 7 percent in the same period last year.
Despite the fact that this year saw the implementation of VAT, Jadwa said it still expects to see higher inflation rates in Ramadan.
"We maintain our inflation rate forecast for the full year of 2018 to average around 3.1 percent, due to expected higher imported inflation, and higher costs borne by local food and agriculture companies," it added.
Earlier this week, Capital Economics said the Saudi economy pulled out of recession in the first quarter of 2018 thanks to oil price rises.
Capital Economics said the oil-dependent Saudi economy grew by 1.5 percent in the first quarter, after having contracted by 0.7 percent in 2017.
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