Saudi Arabia’s inflation remained stable at 2% in November 2024, largely driven by a rise in housing and rental prices

Saudi Arabia’s inflation rate remained steady at 2% year-on-year in November 2024, according to data from the General Authority for Statistics (GASTAT). While the overall inflation rate held steady, increasing housing costs played a significant role in shaping the country’s inflation outlook.

Housing rents surged by 10.8% year on year in November, and apartment rental prices saw a more significant jump of 12.5%. The overall cost of housing, water, electricity, gas, and other fuels increased by 9.1% compared to the same period last year, making it the largest contributor to inflation. GASTAT explained that the weight of housing-related costs, which make up 25.5% of the inflation basket, had a significant impact on the overall rate.

Despite this, Saudi Arabia’s inflation rate remains among the lowest in the Middle East and globally, reflecting the country’s ability to effectively manage economic stability amidst ongoing global price pressures. A report by the World Bank released in October projected that inflation in Saudi Arabia will continue to remain low, with estimates of 2.1% in 2024 and 2.3% in 2025, well below the average inflation rate in the Gulf Cooperation Council region.

The GASTAT report highlighted a number of other notable changes in consumer prices. Personal goods and services rose by 2.7%, mainly due to a significant 23.7% rise in the cost of jewellery, watches, and antiques. Restaurant and hotel costs saw a modest increase of 1.5%, while education costs also rose by 2.7% year on year.

On the other hand, food and beverage prices saw only a slight rise of 0.3%, despite a 1.9% increase in meat and poultry prices. Other sectors experienced price reductions, including furnishings and home equipment, which dropped by 2.9%, driven by a 4.4% decrease in the cost of furniture, carpets, and flooring. Clothing and footwear prices decreased by 2.3%, while transportation costs fell by 2.5% year on year.

When examining monthly inflation trends, the Consumer Price Index (CPI) rose slightly by 0.3% from October to November 2024. The increase was largely driven by a 0.9% rise in housing-related costs, particularly actual housing rents, which climbed by 1%. Additionally, the personal goods and services category saw a 0.5% increase in November, fuelled by a 6.5% rise in insurance expenses.

Food and beverage prices posted a marginal increase of 0.2%, while recreation and culture costs edged up by 0.1%. Meanwhile, clothing and footwear prices fell by 0.3%, and both furnishing and home equipment costs, as well as communication services, saw minor declines of 0.3% and 0.1%, respectively. Education and transportation costs remained largely unchanged during the same period.

In a broader forecast, Moody’s has predicted that inflation in Saudi Arabia will remain under control, projecting rates of 1.6% in 2024 and 1.9% in 2025, with a slight uptick to 2% by 2026.