Saudi Arabia's central bank governor says inflation still within reasonable rate

Saudi Arabia’s central bank governor Fahad al-Mubarak said in a conference on Sunday that inflation in the kingdom is still within a reasonable rate.

Saudi Arabia’s consumer price index (CPI) rose 3 percent in August from a year earlier, official data showed on Thursday, accelerating from a 2.7 percent increase in July.

Food and beverages and transport prices were again the main drivers of inflation, both rising four percent in August, the General Authority for Statistics said in a statement.

Meat prices were up 6.7 percent, pushing up the rate for food and beverages, which make up 18.8 percent of the consumer basket.

Prices were up 0.4 percent on a monthly basis, compared with a 0.5 percent month-on-month rise in July.

“The monthly CPI was affected by the increase of food and beverage prices by 0.8 percent, mainly due to the increase in food prices by 0.9 percent,” the statistics agency said.

In July 2020, Saudi Arabia tripled its value-added tax (VAT) to 15 percent to shore up finances hit by low oil prices due to a price war with Russia and the impact of the COVID-19 pandemic.

Last year, Saudi Arabia’s Crown Prince Mohammed bin Salman said the decision to raise VAT was “a painful measure” that would last between one and five years before a cut to between five percent and 10 percent.