Saudi inflation rate forecast revised for the full year of 2018 to average around 2.6%, down from 3.1% previously
Inflation in Saudi Arabia is set to fall, mainly due to a decline in housing prices, according to a new research note from Jadwa Investment.
Jadwa said it has revised its inflation rate forecast for the full year of 2018 to average around 2.6 percent, down from 3.1 percent previously.
The latest General Authority for Statistics inflation release for August showed that prices rose by 2.3 percent year-on-year, and declined by 0.2 percent month-on-month.
Since the start of the year, prices have risen by an average of 2.5 percent year-to-August, despite the introduction of VAT and utility and fuel price reform at the turn of the year.
Jadwa said food and beverages prices rose by 6.1 percent year-to-August, and by 0.7 percent month-on-month following a marginal decline by 0.3 percent month-on-month in July.
Housing and utilities prices were flat year-to-August, despite the spike in the sub-item electricity and fuels by 24.3 percent year-to-August, due to the fuel and utility price reform in January.
Since the beginning of the year, annual growth in point of sale transactions was up for all sectors except for transportation, with average year-to-August rise at 11.4 percent, compared to 7 percent in the same period last year.
"Despite the fact that this year saw the implementation of VAT, we see that the impact of the slowdown in the housing sector, affected by the declining rentals for housing has weighed on the overall inflation rate," said Fahad Alturki, chief economist and head of research at Jadwa.