Data shows kingdom inflation at 3.5% in Oct, down nearly 1% on previous month.
Saudi Arabian inflation slowed to its slowest pace in more than two years, according to data on the website of the Central Department of Statistics on Sunday.
Inflation decelerated to an annual 3.5 percent in October from 4.4 percent in September, the data showed. It was the lowest rate since June 2007, according to Bloomberg data. Inflation in the Arab world’s largest economy will slow further in the fourth quarter, partially due to lower commodity prices excluding oil, the kingdom’s central bank said November 12.
Inflation rates in Gulf Arab states have been falling from record highs as oil prices plummeted from a July peak last year of $147.27 a barrel and the dollar strengthened, making imports cheaper for countries such as Saudi Arabia with dollar pegs.
Saudi inflation eased to 4.1 percent in August after accelerating to 11.1 percent in July 2008, the fastest pace since Bloomberg started recording the data in 2003.
“As growth begins to pick up, interest rates remain very low and the dollar weak, I expect to see the headline rate pick up once again,” Simon Williams, Dubai-based economist at HSBC Holdings Plc, wrote in an e-mail on Sunday.
“The annual figure is down, but month-on-month there is no change and I think that is a better measure of the underlying trend.”
Consumer prices rose 0.65 percent in October and September, according to the Department of Statistics data.
Annual inflation may slow to an average 4.6 percent next year from 5.1 percent this year, Banque Saudi Fransi said in a report November 12.
“The dollar should strengthen somewhat during 2010, but domestic inflation is likely to stay at historically high levels,” Banque Saudi Fransi chief economist John Sfakianakis said.
Inflation averaged 0.98 percent from 1990 to 2007, he said.