Inflation held steady in October at 2.2%, the same pace as in September, according to the General Authority for Statistics’ (Gastat) consumer price index (pdf).

The stability signals a contained inflation environment in the range of roughly 2–2.5%, with pockets of upward pressure — particularly in rents, ins., and services — offset by declines or stability in other categories, such as furniture, electronics, and household communications equipment, Argaam Investments’ Head of Specialized Research Ahmed Ramzy told EnterpriseAM Saudi.

Food and beverage prices — the heaviest component in the index — jumped 1.5% y-o-y, supported by a 2.5% y-o-y rise in fresh or chilled meat prices. Restaurants and accommodation services prices also climbed 1.1% y-o-y due to a 1.4% y-o-y rise in food and beverage serving services. Global supply-chain and import-cost pressures have been passing through to local retail prices, albeit at a contained pace due to strong competition in the domestic retail market, Ramzy told us.

Rents are still on the rise: Prices of housing, water, electricity, gas, and other fuels were up 4.5% on the back of a 5.7% increase in rents paid for housing. The category continues to exert upward pressure on inflation as the impact of new rent-stabilization rules in Riyadh — which took effect in late September — caps future rent increases but does not roll back rents to prior levels, Ramzy said, adding that the policy is limited to Riyadh for now.

Ins. and financial services prices also rose 8.2% y-o-y, with ins. services logging a 13.2% increase. The rise reflects broad repricing across ins. products, driven by developments in claims costs, service-provider expenses, and compliance with capital-adequacy and regulatory requirements, all of which pushed risk-pricing in the sector to levels higher than in previous years, Ramzy added.

ALSO- Transport prices climbed 1.6% y-o-y, buoyed by a 7.1% increase in passenger transport prices.

On the decline: Furnishings, household equipment, and routine household maintenance prices fell 0.5% y-o-y, largely due to a 4.3% drop in furniture, furnishings, and carpet prices. Meanwhile, the information and communication category saw a 0.2% drop in prices, thanks to a 6.3% decline in information and communication equipment.

On a monthly basis, consumer prices rose 0.3% in October, primarily due to a 0.5% increase in the prices of the food and beverages division and a 0.3% increase in housing, water, electricity, gas, and other fuels.

LOOKING AHEAD- Key areas to monitor include the pace at which rental-price growth decelerates following the implementation of rent-stabilization measures in Riyadh, global food-price and import-cost trends, and the evolution of ins. pricing and financial-services costs, Ramzy said. “The interplay of these factors will determine whether inflation remains anchored near 2% or gradually shifts upward in a way that may require more cautious policy responses.”

WHOLESALE PRICE INDEX-

Producer prices rose 2.9% y-o-y in October, up 0.8 percentage points from the previous month, according to Gastat’s wholesale price index (pdf). This was driven by a 5.4% increase in other transportable goods (except metal products, machinery, and equipment), as well as a 4.6% rise in agricultural and fishery products.

Wholesale prices inched up 0.5% m-o-m in October, supported by a 0.8% increase in prices of other transportable goods.

Tags: