Saudi Arabia’s Inflation Rate Remains Steady at 2 Percent
The inflation rate in Saudi Arabia has remained consistent with the Kingdom’s efforts to balance economic growth with price stability as it advances its Vision 2030 strategy, which aims to diversify the economy beyond oil.
According to the General Authority for Statistics (GASTAT), the consumer price index in February 2025 recorded relative stability compared to January 2025, rising by 0.2 percent due to the increase of housing, water, electricity, gas, and other fuels section by 0.4 percent, driven by a 0.4 percent increase in actual housing rent prices.
The inflation rate remains steady at 2 percent year on year, which is consistent with Saudi Arabia’s efforts to balance economic growth with price stability as the Kingdom advances its Vision 2030 strategy, which aims to diversify the economy beyond oil. The government’s November 2024 budget forecast anticipated inflation to hold steady at 1.9 percent in 2025, up slightly from 1.7 percent in 2024.
The World Bank projected a stable 2.3 percent rate this year, below the Gulf Cooperation Council average. Saudi Arabia’s efforts to balance economic growth with price stability are crucial for achieving its Vision 2030 goals, which include diversifying the economy beyond oil and reducing dependence on hydrocarbons.
Sector Breakdown of Inflation Rates
The inflation rates in various sectors show a mixed picture, with some sectors experiencing significant increases while others saw decreases. Food and beverage prices saw a modest rise of 1 percent, largely influenced by a 3.7 percent increase in meat and poultry costs.
Personal goods and services climbed 3.9 percent, bolstered by a 26.7 percent jump in jewelry prices. Restaurant and hotel costs edged up 0.8 percent year on year, while furniture and home equipment prices dropped 2.5 percent. Clothing and footwear prices declined 1 percent, led by a 2.4 percent drop in ready-made clothing.
Transportation costs also dipped 1.5 percent compared to February 2024. On a monthly basis, consumer prices remained stable overall, with food and beverages slipping 0.2 percent. Personal goods and services rose 0.7 percent, while health and tobacco prices held steady.
Wholesale Price Index (WPI)
In a separate report, GASTAT noted that Saudi Arabia’s Wholesale Price Index increased 1.5 percent year on year in February, driven by a 3.4 percent rise in other transportable goods prices and a 3.9 percent increase in agriculture and fishery products.
Food products, beverages, tobacco, and textiles fell by 0.1 percent year on year, while metal products, machinery, and equipment prices dipped 0.5 percent. Ores and minerals costs dropped 1.9 percent. Compared to January, the WPI declined 0.5 percent, led by a 1.4 percent fall in other transportable goods prices, excluding metal products, machinery, and equipment.
GASTAT’s Explanation
The GASTAT official explained that the increase in housing rents was the main driver of inflation in February. The rise in housing rent prices was attributed to various factors, including an increase in demand for housing due to population growth and urbanization.
Additionally, the official noted that the prices of other goods and services also contributed to the overall inflation rate. The GASTAT official emphasized the importance of monitoring and controlling inflation rates to ensure price stability and maintain economic growth.
Conclusion
The inflation rate in Saudi Arabia remains steady at 2 percent year on year, driven largely by rising housing costs. The government’s efforts to balance economic growth with price stability are crucial for achieving its Vision 2030 goals, which include diversifying the economy beyond oil and reducing dependence on hydrocarbons. The sector breakdown of inflation rates shows a mixed picture, with some sectors experiencing significant increases while others saw decreases.
The Wholesale Price Index also showed an increase in February, driven by a rise in other transportable goods prices and agriculture and fishery products. The GASTAT official emphasized the importance of monitoring and controlling inflation rates to ensure price stability and maintain economic growth.