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Tue 26 Jan 2010 10:39 PM

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Saudi inflation climbed to 4.3% in Dec 2009

Inflation expected to stay in single digits despite price pressures rising for key players.

Saudi Arabia's annual inflation climbed to 4.3 percent in December, its highest level since September, the official news agency reported on Tuesday.

The global crisis cut inflation rates across the Gulf Arab region from 2008 record highs, with some countries such as the UAE and Qatar experiencing falling prices.

Price pressures are seen rising again as key players in the world's top oil exporting region recover but inflation is expected to stay in low single digits this year across the Gulf.

The kingdom's inflation reached 4.0 percent on an annual basis in November after retreating to 3.5 percent in October, its lowest level since June, 2007.

September annual inflation was 4.4 percent. Saudi inflation hit a record high of 11.1 percent in July 2008.

The Saudi cost of living index stood at 125.2 points in December, up from 120.1 points a year earlier, SPA said.

On the month, consumer prices increased 0.4 percent in December, after a 0.3 percent rise in November.

Analysts were expecting inflation to rebound from its October level mainly due to a chronic housing shortage and a weaker US dollar, which raised the cost of imports.

The index was higher in December due to a rise in six areas including rents, fuel and water, SPA said.

The government has estimated annual inflation as averaging 4.4 percent in 2009, below a record high of 9.9 percent in 2008 but above an average 2.3 percent seen in the previous three years.

The dollar, to which Saudi Arabia pegs the riyal, firmed towards the end of 2009, after being under downward pressure.

A weaker greenback boosts the cost of imports for the world's biggest oil exporter, a major importer of food products. (Reuters)

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