RIYADH: Saudi Arabia’s annual inflation rate ticked up to 2.3 percent in August from 2.1 percent in July, with housing rents continuing to do most of the lifting, official data showed.
According to the General Authority of Statistics, the housing, water, electricity, gas, and other fuels division rose 5.8 percent year on year, driven by a 7.6 percent increase in actual rentals — the biggest single contribution to headline inflation because housing carries the largest weight in the Consumer Price Index basket.
While insurance and financial services posted the fastest annual increase at 8.1 percent according to the report, its smaller weight means it adds less to the overall index than housing.
Beyond rents, personal care, social protection and other goods and services rose 4.8 percent year on year, with restaurants and accommodation up 3 percent, nad recreation, sport and culture up 2.7 percent.
Transport saw a 1.2 percent rise.
Offsetting this, furnishings and household equipment fell 0.3 percent year on year, while information and communication declined 0.4 percent, providing some relief from tradable goods.
Across the Gulf Cooperation Council, inflation generally remains contained by currency pegs and energy and food policy buffers, even as categories like housing and services push higher.
Globally, headline rates have cooled from their 2022 to 2023 peaks but remain sensitive to energy prices, agri-food dynamics, and shipping-related costs, while the services component is still sticky in many large economies.
Against that backdrop, the Kingdom’s August outcome of 2.3 percent keeps Saudi inflation moderate by international standards, with domestic housing and services rather than imported goods seen as the main swing factors.
GASTAT has revamped the CPI to align with global best practice: the base year is now 2023, the basket and weights were refreshed using the 2023 Expenditure and Income Survey and other sources, and coverage now spans all regions of the Kingdom. August is the first release under the upgraded framework, aimed at greater inclusiveness, accuracy, and transparency.
What’s driving prices?
Saudi housing rents are rising because demand in the big cities is racing ahead of immediately available supply. Rapid job creation and ongoing Vision 2030 projects are drawing both Saudis and expatriates into Riyadh, Jeddah and the Eastern Province, lifting household formation and tightening the rental market.
JLL consultancy reported in September that rents continued to climb in Riyadh and Jeddah, as apartments remain the preferred and more affordable option.
According to Saud Al-Sulaimani, JLL Saudi Arabia’s country lead and head of capital markets, policy support has created strong underlying demand, and the foreign ownership law scheduled for January 2026 is expected to catalyze the sector’s next phase and broaden its mix.
Supply is expanding, but with a lag: developers are set to deliver roughly 27,500 new units across Riyadh and Jeddah this year, according to JLL, yet absorption remains strong as prices for both apartments and villas have pushed higher, reflecting sustained end-user demand.
Policymakers are trying to ease pressures through new supply and market-balancing measures, but these effects materialize gradually.
On the month, the CPI rose 0.1 percent in August. Housing, water, electricity, gas and other fuels increased 0.4 percent, reflecting a further rise in housing rents.
Food and beverages gained 0.1; restaurants and accommodation, personal care and other goods, furnishings and household equipment, and tobacco each added 0.1 percent. Insurance and financial services edged up 0.2 percent, while education climbed 0.8 percent.
Wholesale inflation steady
Saudi Arabia’s Wholesale Price Index, a gauge of pre-retail price trends, rose 2.1 percent year on year in August, unchanged from recent months, and increased 0.2 percent month on month, according to a separate report by GASTAT.
The annual gain was driven by other transportable goods of 4.2 percent, led by refined petroleum products at 8.2 percent, alongside agriculture and fishery products at 4.4 percent.
On the month, metal products, machinery and equipment added 0.2 percent, supported by gains in transport equipment at 0.9 percent and fabricated metal products 0.7 percent.
“Other transportable goods” advanced 0.4 percent month on month on chemicals, while food products, beverages, tobacco and textiles fell 0.1 percent, alongside marginal declines in agriculture and fishery products by 0.1 percent and ores and minerals declining by 0.3 percent
Wholesale cost dynamics often filter into consumer prices with a lag. August’s pattern, firm refined-product and agricultural readings, but softness in some goods, suggests balanced pipeline pressures heading into the autumn.
Given the CPI’s composition under the updated 2023 base, housing-related services still look set to dominate the near-term path of inflation.
