Saudi Arabia's central bank on Monday said it expects inflation to further decline in February and March after it hit a 12-month low in January, due mainly to a slower rise in home rents and drops in steel and food prices.

"On the basis of current data, there is a general trend pointing to a continued retreat of inflationary pressures in the Saudi economy during the first quarter," the Saudi Arabian  Monetary Agency (Sama) said in a report on its website.

Annual inflation fell to 7.9 percent in January from 9 percent in December.

The Saudi cost of living index rose to 120.5 points on January 31 compared with 111.7 points on the same day a year earlier, the kingdom's Central Department of Statistics said.

Rents rose 20.3 percent while food and beverage costs climbed 8 percent, the data showed. - Reuters