Saudi May inflation slows to 2.2% as transport, miscellaneous goods prices dampen growth

On a month-on-month basis, general consumer price indices, or CPI, increased 0.1 percent. (Shutterstock)
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Updated 16 June 2022
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Saudi May inflation slows to 2.2% as transport, miscellaneous goods prices dampen growth

RIYADH: Saudi Arabia’s annual consumer inflation slowed to 2.2 percent in May, from 2.3 percent in April, according to the latest data released by the General Authority for Statistics.

The slowdown in headline inflation is driven mainly by the deceleration of growth in miscellaneous goods, transport as well as clothing and footwear prices, data compiled by Arab News revealed.  

In May, the main components of the CPI inflation were food and beverages (+4.2 percent) and transport (+4 percent), according to a GASTAT press release. 

Sectors that drove the change in headline inflation

While looking at the breakdown of sector relative contribution to annual inflation, housing, water, electricity, gas and other fuels sectors witnessed faster growth in the price index, with the rate having quickened to 0.5 percent from 0.2 percent in April.

But this increase was offset by slower growth in the transportation sector which grew at 4.1 percent against 4.6 percent recorded in April.

At the same time, the effect of a faster deflation in clothing and footwear to -1.7 percent from the previous -0.7 percent was offset by restaurants and hotels where prices growth quickened to 4.1 percent from 3.2 percent in April.

The resulting dampening effect on the headline annual inflation figure for May came in from a slower growth in the price index for miscellaneous goods which has a 13-percent weight in the CPI basket. In May the growth rate slowed to 2.2 percent from 2.8 percent in April.

As for sector-by-sector contribution to month-on-month inflation, the dampening effect almost entirely resulted from a slower rate of growth in the price index for food and beverages, which fell to 0.2 percent in May from 1.7 percent in April. 

The combined push upwards from price growth in the housing, water, electricity, gas and other fuels as well as home furnishings and equipment was partly offset by the slowdown in transport prices to zero percent in May compared to 0.7 percent in April.

Saudi Arabia is an energy-rich country that subsidizes its energy products as a direct way of redistributing the government income from oil and natural gas to the population. They are also considered part of the social contract.

According to Mazen Al-Sudairi, head of research at Al-Rajhi Bank, “The fuel prices paid by the electricity producers represent a minor fraction of the international prices, reflecting a substantial government subsidy aiming at reducing the final consumer electricity bill.”

Al-Sudairi also added that the Saudi consumers are also partly shielded from the higher impact of oil prices after the government put a cap on petrol prices when oil breaches $70 to contain inflation.

Jadwa ups its inflation forecast

Saudi-based investment firm Jadwa, which raised its 2022 inflation estimate to 1.7 percent from the previous 1.2 percent in February, now expects 2022 inflation at 2.4 percent.

The investment firm upped its inflation forecast further in April due to the increased risk of faster price growth in China. That’s because China has a 20-percent share in the Kingdom’s total imports. The upward revision in inflation is also due to an increase in prices for housing, water, electricity, gas and other fuels. 

However, in view of the possibility of further rate hikes by the end of 2022, the firm expects the value of the Kingdom’s currency to rise, which is to “help insulate the Kingdom’s import costs somewhat during the year.”


Red Sea’s oxygen balance under strain, experts warn

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Red Sea’s oxygen balance under strain, experts warn

  • Scientists say warming waters, nutrient runoff and coastal development could quietly erode coral resilience

RIYADH: The Red Sea may not have dead zones, but its fragile ecosystem is vulnerable to oxygen depletion — a quiet decline that can undermine coral health and disrupt marine life.

Sea dead zones are hypoxic or low-oxygen pockets that form most often when nutrient pollution — especially nitrogen and phosphorus from farm runoff and wastewater — fuels blooms that ultimately strip oxygen from the water.

Experts say the risk is not inevitable, but it depends on earlier detection and tighter control of the conditions that drain oxygen from coastal waters.

A sea that relies on its own “breathing” is also a sea shaped by geography.

FASTFACT

DID YOU KNOW?

  • The Red Sea is naturally low in oxygen because of its warm waters and high salinity — making it especially vulnerable to further oxygen decline.
  • The Red Sea’s narrow Bab Al-Mandab strait limits deepwater exchange, meaning the basin largely depends on its own internal circulation to ‘replenish’ oxygen.
  • Saudi Arabia’s coastline features steep underwater drop-offs, allowing deep, oxygen-poor water to move closer to coral reefs near shore.

Matheus Paiva, a senior oceanographer, told Arab News that “the Red Sea’s shallow Bab Al-Mandab choke point limits deepwater exchange,” meaning oxygen replenishment depends heavily on internal overturning circulation.

He said this circulation is driven as surface waters flow north, cool, become denser and sink, helping ventilate deeper layers through vertical mixing.

Paiva said the Saudi coastline’s underwater topography makes the risk more immediate close to shore.

Coral reefs along Saudi Arabia’s Red Sea coast, where scientists say warm, salty waters and limited deep-water exchange can leave ecosystems vulnerable to low-oxygen stress. (Unsplash.com)

“Unlike regions with wide, gradual shelves, our coast features narrow fringing reefs that drop sharply into deep water via steep underwater cliffs and canyons,” he said.

“This ‘step-and-drop’ topography brings deep oxygen-poor water close to shore.”

Paiva said warming at the surface can intensify stratification and reduce vertical mixing. He said that can allow low-oxygen water to creep upslope and affect shallower reef zones.

How oxygen gets consumed faster than it’s replaced is where human pressure can tip the balance.

Carlos Duarte, executive director or the Coral Research and Development Accelerator Program at KAUST, told Arab News that the Red Sea’s baseline conditions create vulnerability. “Because of its warm waters and high salinity, the Red Sea is inherently low in oxygen and, therefore, vulnerable to processes that decline oxygen further.”

He said algal blooms and heat waves raise biological oxygen demand, linking low oxygen to coral mortality.

Duarte said human-driven nutrient and organic inputs can intensify these declines.

He said poorly managed urban development and aquaculture operations can contribute nutrient and organic loads that fuel algal blooms.

Coral reefs along Saudi Arabia’s Red Sea coast, where scientists say warm, salty waters and limited deep-water exchange can leave ecosystems vulnerable to low-oxygen stress. (Unsplash.com)

Duarte said that as bloom material decomposes, it strips oxygen from the water and can lead to hypoxia.

The Red Sea’s celebrated clarity reflects a naturally nutrient-poor system. “The risk is amplified because the Red Sea is naturally oligotrophic. It is nutrient-poor and crystal clear,” Paiva said.

He added that wastewater releases and heavy rain events that trigger flash floods can push large nutrient loads into coastal waters in a short time.

In turn, those pulses can threaten biodiversity and the marine environment that underpins tourism investments along the Kingdom’s Red Sea coast.

Seeing low oxygen coming — rather than reacting after the fact — is the promise of new monitoring and analytics.

Paiva said high-accuracy oxygen data still relies on direct measurements collected during vessel surveys.

Carlos Duarte, executive director or the Coral Research and Development Accelerator Program at KAUST.

“We still depend heavily on classic vessel surveys,” he said. Teams deploy multiparameter sondes to profile the water column and collect water samples to establish a baseline.

“This ‘water-truthing’ remains the industry standard for high-accuracy data,” he said.

Saeed Al-Zahrani, general manager for Saudi Arabia at NetApp, said continuous data can help teams intervene earlier. “Oxygen depletion is rarely sudden; it tends to build over time when conditions line up,” he said.

Al-Zahrani said AI can flag anomalies, learn what “normal” looks like in specific locations, and generate short-horizon risk forecasts.

He added that it creates a decision window — guidance on when to increase sampling, where to focus response efforts, and when to tighten controls around discharges.

Coastal development that reduces oxygen risk starts, Duarte said, with what never reaches the sea.

Duarte said Saudi Arabia’s west coast investments have an advantage compared with older coastal destinations: the opportunity to design sustainability into projects from the outset rather than trying to retrofit after degradation becomes evident.

Duarte said nutrient control is a direct lever to reduce oxygen-depletion risk. “Achieve circular economies where organic products and nutrients are recycled and reused in the system to avoid discharging nutrients to the marine environment,” he said.

Al-Zahrani said wastewater and environmental systems produce huge volumes of information, but fragmentation can slow decisions.

He said connecting data in near real time can help detect problems earlier and anticipate load spikes tied to rainfall, tourism peaks, or industrial activity.

Reef resilience depends on reducing stress before heat and low oxygen overlap.

Duarte told Arab News: “Coral reefs are extremely vulnerable to oxygen depletion.” He added that it can contribute to bleaching and mortality in a warmer ocean.

He said marine heat waves can worsen oxygen stress by reducing oxygen solubility and limiting ventilation of subsurface waters, while increasing oxygen demands of organisms.

Duarte said reducing nutrient inputs and managing reefs to avoid excessive growth of seaweed can build resistance.

He also said models that account for how waves and currents interact with reef topography — work he said is being developed at KAUST — can help guide restoration toward sites more likely to remain oxygenated during heat stress.