Ahead of Saudi Arabia’s budget announcement, which is expected for the end of the week after a special meeting, inflation in Saudi Arabia is approaching its lowest levels since April 2007, Asharq Alawsat reports.
The 7-year low is expected to be official when Saudi Arabia’s Central Department of Statistics and Information releases official data before the new year.
“The country’s inflation rate for December will fall below the 2.5 percent recorded the previous month, which was the lowest since September 2012,” Asharq Alawsat reports, citing economist Abdulaziz Al-Fahad. “The country’s central bank, the Saudi Arabian Monetary Agency (SAMA), predicted an average inflation rate of below 3 percent at that start of 2014. Inflation reached its highest point this year in January, when it hit 2.9 percent.”
Inflation may continue to fall in 2015, the report said, despite what is expected to be an increase in governmental spending next year.
Low oil prices are impacting virtually every sector in Saudi Arabia. “[L]ow oil prices will reduce cash among costumers in the local market, and this reason will play a big role to force businessmen to reduce prices to continue in the market. High oil prices, from 2010 to 2014, were the main reason to raise the inflation rate across all sectors in the Kingdom,” said Abu Al-Ainain, an economist, to Arab News.
“Government spending was expected to be about 860 billion riyals ($229 billion), up from a record 855 billion riyals in the 2014 budget plan,” Reuters reports, citing a report in the Al-Madina newspaper.
“If the figures in the Al-Madina report are correct, they suggest Saudi authorities are confident of their ability to ride out a period of low oil prices and see no need to slash spending or impose harsh austerity policies.”
