Saudi inflation to rise on food costs
Riyadh, May 15, 2013
Saudi Arabia's inflation rate in April may edge slightly higher and continue on an upward trajectory during the second quarter as the food and beverage category represent a weight of 21.7 per cent in the inflation index, said leading Saudi lender National Commercial Bank (NCB) in its economic review.
The inflation rate for the single category of housing, water, electricity, gas, and other fuels reached its highest level of 3.1 per cent Y/Y since May last year, as the rent subcategory accelerated to 3.7 per cent year-on-year during March against 2.9 per cent in February, the NCB report stated.
As for inflation during March, the rate of inflation sustained the 3.9 per cent year-on-year increase for the third consecutive month this year, it added.
According to NCB, the anticipation of the mortgage law and the possibility of passing a new tax law on “white land” has kept the real estate market on hold for the time being.
The regulatory framework of the new law will unfold the direction of the real estate market, albeit having its full impact on the medium to long term, it said.
The Reuters/Jefferies CRB Index gained 1.2 per cent during March which was partially reflected in the food and beverage category rising by 5.3 per cent year-on-year as food prices are majorly influenced by imported inflation, said the NCB report.
More specifically, bread & cereal category as well as the meat and poultry category both have increased the inflation benchmark to 6.5 per cent and 7.2 per cent respectively.
The monetary situation in the largest economy in the GCC continues to represent the prosperous state of Saudi. The sustainable level of growth in the monetary system is in line with the fiscal expansionary policy while the extent of inflationary pressure remains subdued, said NCB in its review.
The monetary base increased by 9.1 per cent annually during March. The main contributors to the gain were; deposits with Saudi Arabian Monetary Agency (SAMA), currency outside banks, and cash in vault, all growing at an annual rate of 7.3 per cent, 10.3 per cent, and 16.3 per cent, respectively.
However, on a monthly basis, deposits with SAMA expanded during March by 3.6 per cent month-on-month to reach SR160.8 billion. Additionally, local banks increased their cash in vault which recorded a growth of 9.6 per cent amounting to SR20.9 billion, said the NCB report.-TradeArabia News Service