Saudi inflation edged up to a 14-month high of 5.4 percent on an annual basis in February, mainly because of higher food and housing costs, state news agency SPA reported on Sunday, quoting data from the Central Department of Statistics.     

Compared to the previous month, consumer prices increased by 0.3 percent after a 0.1 percent rise in January.    

The largest Arab economy expanded by an officially estimated 6.8 percent in 2011, helped by robust crude oil prices and generous government spending, and is forecast by a Reuters poll of analysts to grow 4.0 percent this year.   

Analysts polled by Reuters in December expected average inflation of 5.0 percent in 2012, the same rate as in 2011.

Saudi inflation accelerated to 5.3 percent in 2010 from 5.1 percent in 2009, still below a record high of 9.9 percent hit during the oil-boom and global crisis year of 2008.

Saudi Arabia's central bank said in February it expected relative price stability or a slight decline in inflationary pressures in the near term.

Paul Gamble, head of research, Jadwa Investment, said: 'The concern with the new numbers is the big jump in rent again... in year-on-year we are at the highest since May 2007.'     

'That is something to watch out for. It suggests that new property promised by the government is not going on stream and also that demand is rising. We will go into a period of higher rental inflation until new property that is being produced under government schemes enters the market.'

Liz Martins, senior Mena economist, HSBC, Dubai, said: 'The number still looks quite benign considering that private sector and non-oil growth is picking up quite strongly, and credit and wages are rising. These factors may take inflation higher later in the year.'  - Reuters