Annual inflation in 2025 masked a divergence between a red-hot rental market and a deflationary trend in tech and household goods, with the latest data from the General Authority for Statistics (Gastat) showing a 2.0% rise in the annual CPI index (pdf). At the same time, wholesale prices (WPI) also rose 2.0%, driven by higher prices in refined petroleum and agricultural products.

The headline figure indicates stability, but the engine of inflation has narrowed. Housing costs and specific industrial inputs are now the primary drivers of the CPI and WPI baskets, while traditional “cost of living” items like food and communications have largely stabilized or dropped.

The “rental trap” remains the primary driver: Housing and utilities prices jumped 6.1% over the year, driven almost exclusively by an 8.2% jump in actual rentals for housing. Other key pricing shifts:

  • The experience economy: Personal care and miscellaneous items rose 5.1%, fueled by an 18.6% rise in “other personal belongings,” while recreation and culture rose 2.5%;
  • Ins. and financial services were up 6.3%;
  • Stable sectors: Food (1.1%), tobacco (0.6%) and restaurants / accommodation (1.8%) saw modest growth.

Where the pressure eased: Tech and communications, home goods, and healthcare services were all on a deflationary path in 2026, with household maintenance leading the pack with a 0.8% decline.

Wholesale prices signal downstream pressure: The 2.0% increase in the WPI (pdf) suggests potential cost-push pressure for industries in 2026. Refined petroleum, agriculture and fishery, and manufacturing input prices were all up throughout 2025, with ores and minerals providing a slight reprieve as prices in that sector fell 1.2%.

What to expect this year

Price growth is projected to hold steady at somewhere between 2-2.2% in 2026, according to NBK, Finance Ministry, and World Bank forecasts. A cooling housing market — aided by the rent freeze in Riyadh — will help offset rising global commodity costs, NBK previously noted.

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