RIYADH: Saudi Arabia’s inflation rate slightly edged up to 2.8 percent in May 2023, compared to 2.2 percent in May 2022, primarily driven by higher housing prices, water, electricity, gas and other fuels, according to official data.

The report released by the General Authority for Statistics noted that the prices of housing, water, electricity, gas and other fuels increased annually by 8.4 percent in May, while food and beverages rose by 0.9 percent.

The Kingdom’s inflation rate has shown signs of slowing down over the past few months as it was 2.7 percent in both March and April, while it was 3.4 percent in January and 3 percent in February.

The report further noted that rents for housing increased by 9.9 percent year over year in May 2023, with apartment leases rising by 23.7 percent. 

“Prices for rents were the main driver of the inflation rate in May 2023 due to their high relative importance in the Saudi consumer basket with a weight of 21 percent,” said the GASTAT report. 

Restaurant and hotel prices increased by 5 percent in May compared to the same month of the previous year, while transportation rose by 1.6 percent during the same period.

Earlier this month, the International Monetary Fund said that inflation in Saudi Arabia is expected to remain at 2.8 percent in 2023 despite global economic challenges. 

The IMF’s Regional Economic Outlook for the Middle East and Central Asia, released in May, also echoed similar views and noted that the possibility of a rise in headline and core inflation in oil-exporting countries would be low in 2023. 

“Headline and core inflation in many oil-exporting countries like Bahrain, Iraq, Kuwait, Oman, Qatar and Saudi Arabia remain relatively lower than elsewhere — as subsidies and caps on certain products, the strengthening of the US dollar to which many of the countries peg their currencies, and limited share of food in the consumer price index basket have helped to offset imported inflationary pressures,” said the IMF report.  

Meanwhile, Saudi Arabia’s Wholesale Price Index decreased by 1.1 percent in May 2023 compared to the same month in 2022, while it was also down from a 0.2 percent increase in April 2023.

According to GASTAT, the decrease in WPI was led by declined prices of basic chemicals, which dipped annually by 28.2 percent. 

The report noted that prices of transportable goods decreased by 2.1 percent.

“Food products, beverages, tobacco and textiles prices increased by 2.7 percent as a result of the increase in the prices of dairy products by 17.8 percent and grain mills, starch and other food products by 1.8 percent,” said GASTAT.