Saudi minister vows war on inflation
Riyadh, March 5, 2008
Saudi Arabia's new trade minister plans to submit proposals to King Abdullah next week on how to combat inflation which hit a more than quarter-century peak in January, news reports said yesterday.
Abdullah bin Ahmad Zainal Ali Ridha replaced Hashem Yamani as the kingdom's Industry and Trade Minister.
Yamani resigned amid criticism over rising inflation in the world's largest oil exporter, where price rises hit seven per cent in January, the highest since at least 1981.
'I have a plan to control and monitor prices and to confront the repercussions of inflation on the consumer,' Zainal said.
Saudi Arabia has tried to offset the impact of inflation on its 25 million people by introducing cost of living allowances for state employees, welfare payments, subsidies and tighter bank lending restrictions.
But the kingdom's ability to contain price rises is limited by its riyal currency's peg to the US dollar, which forces it to track US monetary policy at a time when the Federal Reserve is slashing interest rates to ward off recession.
By contrast, Gulf economies are surging on a five-fold rise in oil prices since 2002.