Inflation rates in Saudi Arabia witnessed a new decline in March of this year.
Inflation rates recorded their highest level since last August in February 2024 at 1.8 percent. According to a report by the Saudi General Authority for Statistics, the consumer index reached 1.6 percent.
The report indicated that the increase in the prices of housing, water, electricity, gas and other fuels by 8.8 percent was the reason behind the rise in inflation rates in the Kingdom, which is due to the lowest level recorded in December 2023.
The consumer price index reached 1.6 percent in March, compared to 1.8 percent in February 2024.
Economic analysts believe that inflation rates in the Kingdom have declined during the first three months of this year compared to the same period last year. Economic analyst Hussam Al-Dakhil
confirmed that the inflation rate has declined in the first months of this year compared to the same period last year. Al-Dakhil added that inflation rates have declined since last August and have fluctuated
between 1.8 percent and 1.6 percent from September 2023 to March 2024. Despite the increase in some sub-rates, they have recorded increases at a slower pace compared to last year, and there are indications of a decrease in inflation rates in sectors such as tobacco, transportation, health, and others.
High inflation rate economies of countries
For his part, economist Salah Al-Shalhoub believes that the rise in inflation rates is a real crisis and has negative repercussions on the economies of countries. He added, "In the local reality, this slight fluctuation in inflation rates over the past months cannot be described as a problem, as it is still within the normal range. Last month also recorded a decrease in the inflation rate, as it reached 1.6 percent compared to the previous month when it reached 1.8 percent."
Despite the slowdown in the consumer price index, the negative repercussions of the high inflation rates in commodity prices, which Al Dakheel defined as a weakness in purchasing power, came to raise the price of goods and increase the cost of borrowing, as the relationship between inflation and interest rates is a direct relationship. He pointed out that increasing inflation rates to high levels generally leads the economy into a phase of cumulative inflation, as growth declines and unemployment increases, leading to economic recession.
Country policies to curb high inflation rates domestically
Regarding the policies used by the government to limit the rise in inflation rates locally, Al-Dakhil pointed out that Saudi Arabia has worked since the beginning of the global inflation crisis over the past years to develop solutions that contributed to limiting its rise, and maintained natural rates, and he defined them with four points: fixing the ceiling on fuel prices, as the state bears the difference in the price increase, financial support allocations such as support for social security beneficiaries and the Citizen Account Program, financial support for a number of vital sectors such as the agriculture and livestock sectors, and finally increasing strategic stocks such as food stocks.
Al-Shalhoub agrees with this, saying, “The country has adopted a series of measures and procedures to confront any rise in inflation rates, and they had a positive impact on stabilizing inflation rates internally, and did not exceed the normal rate.”
Significant increases in rental values
In the same context, last month witnessed a significant increase in the value of actual rents, with an increase rate of 10.5 percent, affected by a 9.7 percent increase in villa rental prices. The increase in this group was directly reflected in the consumer price index, given its increase in the index by about 21 percent.
The price increases were not limited to the housing and real estate rentals section, but also included the food and beverages section, which also recorded an increase of 0.9 percent. According to the Authority’s statement, the increase in this group was a result of a 6.8 percent increase in vegetable prices.
The consumer price index witnessed a decrease in some sections, including clothing and shoes by four percent, home furnishings by 3.2 percent, and communications by two percent.