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Fri 13 Feb 2015 10:09 AM

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Saudi Arabia's inflation set to remain stable in Q1

Central bank says state handout ordered by King Salman may push up some domestic prices

Saudi Arabia's inflation set to remain stable in Q1

A state handout to Saudi Arabian citizens to mark the accession of King Salman may push up some domestic prices but overall inflation is expected to stay stable in the current quarter, the central bank said in a quarterly report.

Last month, Salman ordered the immediate payment of two months of bonus salary to all state employees and pension to retired government workers, as well as payments to students and others, and spending on improving electricity and water services.

In total, the additional spending may be over 100 billion riyals ($26.7 billion).

"Some commodity prices may witness inflationary pressures as a result of the increase in consumption demand after the royal decree..." the central bank said.

"However, the projections still show a stable domestic inflation rate as a result of the global decrease in commodity prices."

The annual Saudi inflation rate was 2.4 percent in December, the lowest level since at least September 2012, when the current data series began.