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Sun 12 Oct 2008 04:33 PM

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Saudi inflation falls to 10.9%

Rate eases slightly in August but double digit rise still spurred by 18.5% year-on-year rent increase.

Saudi inflation eased slightly in August but remained in double digits at 10.9 percent compared to 11.1 percent in July, official statistics showed on Sunday.Figures released by the Saudi Arabian Monetary Agency (SAMA), or central bank, showed that the consumer price index (CPI) reached 117.9 points in August compared to 106.3 points a year earlier.

The increase was mainly spurred by an 18.5 percent year-on-year rise in rents and the water index and a 15.8 percent increase in foodstuffs and beverages, SAMA statistics showed.

The index of other commodities and services increased by 13.4 percent while health care, transportation and education rose slightly.

Last month, SAMA governor Hamad al-Sayari said inflation represented the biggest challenge to the oil-rich kingdom.

"The Saudi economy is confronted with many fundamental challenges but the biggest challenge is the rate of inflation," Sayari said.

He blamed inflation on an increase in shipping costs and insurance premiums around the world.

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