Reuters – In Saudi Arabia, the annual inflation rate has been on a steady decline for the fifth consecutive month, reaching 1.6% in October 2023. This figure is slightly lower than both the market predictions and the rate of 1.7% recorded in September. The current rate is the lowest since February 2022, indicating a significant slowdown in inflation.
Factors Influencing the Inflation Rate
The deceleration in inflation can be attributed to a slower increase in prices across several sectors. These include housing & utilities, where the growth rate dropped from 8.1% in September to 7.8% in October, education (from 1.8% to 0.8%), and restaurants & hotels (from 2.5% to 1.9%).
Interestingly, certain sectors witnessed a decrease in prices. These include clothing & footwear (from -3.6% to -3.7%), furnishings & household equipment (from -2.8% to -3.1%), communication (from -1.2% to -2.5%), and miscellaneous goods & services (from -0.7% to -0.9%).
Stable and Rising Costs
Meanwhile, the transport, health, and tobacco sectors saw no change in prices. On the other hand, the food & beverages sector experienced a slight increase in costs (from -0.2% to 0.8%), while the recreation & culture sector remained steady at 1.2%.
Monthly Consumer Prices
On a monthly basis, consumer prices saw a modest rise of 0.1% in October, following a period of no growth in the previous month.
The slowing inflation rate in Saudi Arabia could have mixed effects on the economy. On one hand, it could potentially increase consumers’ purchasing power, leading to higher spending and economic growth. On the other hand, if the inflation rate continues to fall, it could lead to deflation, which could discourage spending and investment, thereby slowing economic growth. Therefore, it’s crucial for policymakers to monitor these trends closely to ensure economic stability.