Saudi Arabia Inflation Rate Forecast 2011 ; For the future, averages for the year are used. Going back to 2008, the rate was at 9.87%, dropping by almost 50% over next 12 months. With that, 2009 ended at 5.057%, placing Saudi Arabia for worldwide ranking at number 61. Regarding the future for the country’s inflation rate, experts believe that 2010 will end at 5.20%, not much of a change from the prior year. However, for 2015, predictions are that the Saudi Arabia inflation rate will be at 3.00%.
Saudi annual inflation eases to 4.7 percent
Saudi Arabia's annual inflation rate dipped in March on falling food prices, while analysts raised doubts Wednesday that such a decline could be sustained once the effects of a $120 billion spending package are felt in the oil rich kingdom.
The Saudi Arabian Department of Statistics and Information said annualized inflation dropped to 4.7 percent in March from February's level of 4.9 percent - a drop that took many by surprise given expectations that the massive handouts and perks announced by King Abdullah in February and March are likely to raise prices over the next few months. Ref... by http://www.vcstar.com/
Inflation on the rise as handouts raise pressure
Pressure from housing costs, along with food inflation of an estimated 6.9%, faster than last year, and goods and services inflation of 6.3% should push inflation in 2011 to 5.6%, higher than our prior estimate of 5.1%.
Global food prices continue to face upward pressure resulting from steep gains in commodity prices, particularly crude oil, so far this year. Higher oil prices can raise the cost of imported goods by elevating the cost of shipping. The dollar, and hence the Saudi riyal, has also weakened in the past month versus global currencies, although we expect the effect on imported inflation will be less limited. Emerging market inflation has been rising in the last few months, propelling the cost of imports.
Since Saudi Arabia relies heavily on imported foodstuffs, these additional costs are likely to be passed on to consumers over the next few months. Nonetheless, the government is wary about the impact of inflation in certain essential food items, such as rice, on lower-income brackets of society and would likely move in with price controls and subsidies to dampen any large jumps in food prices. The food and beverage inflation rate fell for the third straight month in February to 6%, although we expect the impact of rising global food prices to trickle down to the local economy toward the end of the second quarter and in the second half of the year.
In February, the Food and Agriculture Organisation (FAO)’s food price index rose for the eighth consecutive month, hitting a new record high steered by a quick rise in the price of cereals, meat and dairy products. International prices of wheat, for instance, rose 7% in February, while export prices for maize climbed 9%. Saudi Arabia, which had been self-sufficient in wheat production up until a few years ago, is moving toward importing wheat as it phases out some water-intensive crop production which have drained sparse non-renewable water resources.
Due to elevated pressures this year, inflation in 2012 is not likely to abate, although we expect to see a small degree of downward pressure on the rental index in 2012 to 7.9% as new supply reaches the market. The over all inflation rate should rise to 5.9% in 2012, linked to a rise in food inflation to 8.4% due to continued global price pressures. While month-on-month food inflation pressures should abate in 2012, a low base effect could elevate the annual food inflation figure in the first half of the year.
In the last two years, Saudi Arabia’s expansionary spending as part of its $385 billion five-year development plan managed not to stoke inflation by focusing on capital investments in infrastructure. The new spending initiatives decreed by the king this year target citizens specifically with handouts and benefits, and thus do pose direct inflationary risks.
It is difficult to judge the extent of inflationary impact bonuses and pay rises will have because the manner they were distributed differs from the government’s previous strategy. The last time Saudi Arabia raised wages it did so cautiously and incrementally, providing public sector employees with cost of living allowances rising 5% per year for three years. The two-month bonus offered in the first quarter of this year, by contrast, gives employees 17% more money to spend in 2011. We will continue to watch private consumption patterns to judge whether our inflation forecast warrants a further upward revision as the year progresses. Original Post By http://www.arabialink.com/
Tag ; Saudi Arabia Inflation Rate predictions 2011, Saudi Arabia Economic Outlook 2011,
Tag ; Saudi Arabia Inflation Rate predictions 2011, Saudi Arabia Economic Outlook 2011,
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