JEDDAH: A plunge in Saudi Arabia’s inflation rate, to its lowest level in more than 10 years, is good news for the Kingdom’s efforts to reduce a huge state budget deficit without stifling economic growth.
Annual consumer price inflation slowed to 1.7 percent in December from 2.3 percent in November, the Central Department of Statistics reported on Monday. On a month-on-month basis inflation was negative, with prices dropping 0.5 percent.
Much of the decline was due to lower food prices, which fell 4.3 percent from a year earlier. Saudi Arabia imports many basic foods; its costs were reduced by soft global food prices and the Saudi riyal’s peg to the US dollar, which has been strong globally.
Riyadh hiked domestic fuel and utility prices in December 2015 to cut a $98 billion budget deficit produced by low oil prices. That caused inflation to almost double in the following month to 4.3 percent, its highest level since 2012, squeezing the incomes of Saudi consumers and slowing the economy further.
“In the first half of last year, inflation caused a considerable erosion of household incomes and people’s ability to pay for things — the data shows this has eased,” said Jason Tuvey, Middle East analyst at London-based Capital Economics.
The data is also positive because it shows the economy has been flexible enough to absorb the fuel and utility price hikes of December 2015 without a self-sustaining spiral of higher inflation spreading into other sectors.
That is positive for the government because Riyadh plans another round of fuel and utility price rises around the middle of this year, after it has introduced a program to compensate poorer Saudis for the impact on their living standards.
The Kingdom plans to introduce a 5 percent value-added tax (VAT) next year to shrink its deficit further. While inflation could fall a little further early this year, it is likely to bounce back above 4.0 percent in response to VAT, Tuvey said.
Saudi inflation plunge aids government in fight to tame deficit
Saudi inflation plunge aids government in fight to tame deficit
Closing Bell: Saudi main market sheds 85 points to finish at 11,098
RIYADH: Saudi Arabia’s Tadawul All Share Index closed lower in the latest session, falling 85.79 points, or 0.77 percent, to finish at 11,098.06.
The MSCI Tadawul 30 Index declined 0.63 percent to close at 1,495.23, while the parallel market index Nomu dropped 0.91 percent to 23,548.56.
Market breadth was firmly negative, with 42 gainers against 218 decliners on the main market. Trading activity saw 226 million shares exchanged, with total turnover reaching SR4.5 billion ($1.19 billion).
Among the session’s gainers, Tourism Enterprise Co. rose 9.40 percent to SR15.02. SHL Finance Co. advanced 4.51 percent to SR16.00, while Almasar Alshamil for Education Co. gained 3.56 percent to SR23.88.
Dar Alarkan Real Estate Development Co. added 3.03 percent to SR19.70, and Banque Saudi Fransi climbed 2.61 percent to SR19.30.
On the losing side, Almasane Alkobra Mining Co. recorded the steepest decline, falling 6.61 percent to SR96.
Al Moammar Information Systems Co. dropped 5.14 percent to SR164.20, while National Company for Learning and Education declined 4.60 percent to SR124.30. Saudi Ceramic Co. slipped 4.14 percent to SR27.30, and Arabian Contracting Services Co. fell 4.12 percent to SR116.50.
On the announcement front, Saudi Telecom Co. announced the distribution of interim cash dividends for the fourth quarter of 2025 in line with its approved dividend policy.
The company will distribute SR2.74 billion, equivalent to SR0.55 per share, to shareholders for the quarter.
The number of shares eligible for dividends stands at approximately 4.99 billion shares. The eligibility date has been set for Feb. 23, with distribution scheduled for March 12.
The company noted that treasury shares are not entitled to dividends and that payments will be made through Riyad Bank via direct transfer to shareholders’ bank accounts. stc shares last traded at SR44.80, unchanged on the session.
Separately, National Environmental Recycling Co., known as Tadweer, reported its annual financial results for the year ended Dec. 31, 2025, posting significant growth in revenue and profit.
Revenue rose 53.5 percent year on year to SR1.24 billion, compared with SR806 million in the previous year. Net profit attributable to shareholders increased 68.4 percent to SR60.9 million, up from SR36.2 million a year earlier, driven by higher sales volumes and operational expansion.
Tadweer shares last traded at SR3.80, up 2.70 percent.
