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Saudi inflation jumps to 17-month high in July

Riyadh, August 24, 2010

Inflation in Saudi Arabia climbed to a 17-month peak of six per cent on an annual basis in July, mainly due to transport and food prices, data from Central Department of Statistics showed.

On a monthly basis, the July rise in inflation was the highest since October 2008.

Analysts expected consumer prices in the world's top oil exporter to gather momentum again as the Gulf Arab kingdom recovers from last year's slowdown.

The largest Arab economy is seen expanding by 4.7 per cent this year following a mere 0.6 per cent growth in 2009, helped by recovery in crude prices and generous government spending.

Saudi inflation hit 5.1 per cent last year, after a record high of 9.9 per cent in the oil-boom year of 2008, well above its long-term average of around 1 per cent.

Central bank, government forecasts

The Saudi Arabian Monetary Agency (Sama) said earlier this month it did not expect heavy inflationary pressures in the third quarter.

However, they are likely to continue on higher rents and energy costs as well as food prices, which are seen elevated due to the holy month of Ramadan.

Sama Governor Muhammad al-Jasser said in May monetary policy was not the appropriate response for such supply shocks, while Finance Minister Ibrahim Alassaf also said in May that the kingdom had no plan to raise government spending beyond its 2010 plan to keep inflation under control. – Reuters




Tags: Saudi Arabia | Central Bank | inflation | Sama | Riyadh | July |

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