Jadwa expects Saudi inflation at around 1.1% in 2019
Saudi Arabia’s inflation in 2019 is expected to average around 1.1 percent, as prices are expected to continue the downward trend in the short term, to adjust with VAT and the structural reforms in the labor market, Jadwa Investment noted in its report on Thursday.
The latest General Authority for Statistics inflation figures released for October shows that prices rose by 2.4 percent year-on-year (YoY), and declined by 0.3 percent month-on-month (MoM).
In the year-to-October, prices have risen by a yearly average of 2.5 percent, despite the introduction of the 5 percent value-added tax (VAT) and utility and fuel price reform at the turn of the year, the report added.
The inflation rate in October, at 2.4 percent, is the highest in seven months, compared to a rise in September by 2.1 percent YoY.
However, on a MoM basis, prices continued to slow, by 0.3 percent in October and 0.2 percent in September, indicating a gradual slowdown in prices as the local economy is adjusting to VAT, utility price reform, and other structural changes in the labor market, Jadwa report said.
“Despite the challenges that were expected to arise with the inflation rates, we believe that the payments of the Citizen’s Account, which have reached a total of SAR 27.5 billion over the past year, and the inflation allowance to public sector employees during 2018, have helped citizens cope with inflationary pressures over the course of year,” the report added.