Inflation falls slightly to 2.2% y-o-y in May

Inflation fell slightly to 2.2% y-o-y in May, down 0.1 percentage points from April, according to the General Authority for Statistics’ (Gastat) latest consumer price index (pdf). This is the second time inflation logs a decline since last August, settling in just shy of its peak in nearly two years.

On a monthly basis, consumer prices rose just 0.1%, down 0.2 percentage points from the previous month on the back of an 0.3% price uptick in the housing, water, electricity, gas, and other fuels category, an 0.1% rise in food and beverage prices, and an 0.4% increase in actual housing rent prices.

The usual culprit was at it again: Housing, water, electricity, gas, and other fuels — the heaviest component in the consumer basket — saw a 6.8% increase y-o-y, mostly driven by an 8.1% increase in rents paid for housing in May. This was caused by a 7.1% increase in villa rental prices.

Food and beverage prices were also up 1.6% y-o-y during the month, lifted by a 2.8% rise in meat and poultry prices. Personal goods and services prices also increased by 4.0%, driven by a 24.4% rise in the prices of jewelry, watches, and precious antiques.

ALSO- Restaurant and hotel prices inched up by 1.8%, which was attributed to a 1.6% rise in catering service prices. Finally, education prices also edged up in May by 1.3% y-o-y, primarily due to an increase of 5.6% y-o-y in non-university post-secondary education.

Meanwhile, on the decline: Furnishing and home equipment prices decreased by 2.5% y-o-y, driven by a 4.0% decline in furniture, carpets, and flooring prices. Clothing and footwear prices also fell by 0.9%, affected by a 2.7% drop in footwear prices. Meanwhile, transportation costs fell by 0.8%, which was attributed to a 1.9% decrease in vehicle purchase prices.

LOOKING AHEAD- Riyad Capital sees inflation rising to 2.5% in 2025, before easing slightly to 2.3% in 2026, up from an inflation reading of 1.7% in 2024. This is a less optimistic view on inflation than some others, with the IMF having recently cut its inflation forecasts to 2% for both 2025 and 2026, while Capital Economics expects inflation to hover around 2-2.5% this year, before slowing to 2% in 2026.

WHOLESALE PRICE INDEX-

Producer prices increased by 2% y-o-y in May, driven by a 4.4% rise in the prices of agriculture and fishery products, as well as a 4.3% increase in the prices of transportable goods — excluding metal products, machinery, and equipment, according to Gastat’s wholesale price index (pdf).

Wholesale prices remained stable on a monthly basis, with prices seeing minimal increases during the month. The prices of transportable goods except metal products, machinery, and equipment increased by 0.1%.