Rising food prices drive increase in annual inflation, according to Central Department of Statistics
Saudi Arabia's annual inflation edged up to 4.9 percent in July, from 4.7 percent in June, on rising prices of food, products and services, state news agency SPA said on Monday, quoting official data.
On a month-on-month basis, inflation rose to 1.2 percent in July, from 0.4 percent in June, recording its biggest monthly increase since January 2008, led by a 3.9 percent rise in prices of products and services, the data from the Central Department of Statistics showed.
Prices of foodstuffs, which have the largest, 26 percent weighting in the price basket, rose 1 percent on a monthly basis in July.
"This is a large rise, mainly from products and services as well as foods. These are mostly products that are consumed and the rise is expected considering the seasonal changes," said Abdulhamid al-Amri, a member of the Saudi Economic Association think tank.
"During summer a rise in consumption is expected, especially when it is close to the month of Ramadan," he said.
Food prices usually surge around Ramadan, the Muslim's holy month of fasting which began on Aug. 1, as families enjoy more elaborate evening meals after they break their fast at sunset.
Consumer prices are expected to climb further this year due to surging global food prices and following a government announcement that it plans to spend more than $130 billion on social projects.
The largest Arab economy is seen expanding by 4.3 percent in 2011, helped by generous government spending and three consecutive record budgets including 580 billion riyals ($154.7 billion) of budgeted government spending this year.
Analysts polled by Reuters expected average inflation of 5.6 percent in 2011.
"The increased government spending has added to liquidity and will contribute further to the rise in inflation. We expect the second half of the year to witness more pressure on family budgets," Amri said.