RIYADH: Consumer prices rose by 2.8 percent year on year in March, according to official statistics released on April 24, compared to a rate of 2.9 percent in February.
While Saudi households initially struggled with the higher rate of inflation and started cutting back on spending, analysts say public sector bonuses, pledged by the government, will help boost consumer purchasing power.
In January, a royal order outlined a range of bonuses and benefits to be paid out to public sector workers, pension holders, students and members of the military.
The drag on household consumption should start to ease over the coming months,” said Jason Tuvey, Middle East economist at Capital Economics in a research note. “That said, consumer spending is likely to be a relative weak spot in the overall economic recovery this year,” he said. While inflation is edging downwards, it remains higher than rates recorded last year, with Tuvey saying it was likely that inflation will stay “elevated” until the end of 2018.
The fall in inflation in March was mainly driven by weaker food inflation, according to Capital Economics analysis. Its measure of food inflation fell from 6.4 percent in February to 6 percent in March.
Inflation in housing and utilities declined to 1 percent in March compared to 1.3 percent in the previous month, according to official government statistics. Transport inflation rose in March to 10.4 percent year-on-year from 10.1 percent in February.
