Saudi inflation stayed at 1.8% in August in the last pre-escalation reading

Inflation held steady in the last reading before this month’s escalation, holding at 1.8% for the fourth straight month, according to Gastat (pdf). August’s reading — which matches July, June, and May rates — remains comfortably below 2%, driven again primarily by housing.

On a monthly basis, prices rose just 0.1% from July, with housing up 0.2% on rents, transport up 0.6%, and personal care up 0.8%. That was all partly offset by a 0.4% drop in restaurants and accommodation and a 0.1% dip in food.

Housing is still the main culprit, adding 0.8 percentage points to the headline figure, with the housing, water, electricity, gas, and other fuels division rising 3.9% y-o-y, led by a 3.9% increase in actual rents.

Food and beverages and transport were next, each adding 0.3 points, on y-o-y rises of 1.4% for food and beverages and 2.0% for transport. Personal care and miscellaneous goods contributed 0.2 points, though it posted one of the sharpest price jumps of any division at 3.5%, driven by a 14.4% rise in jewelry and watch prices. The remaining divisions added 0.2 points combined, among them entertainment, sports, and culture, up 2.8% on a 4.7% rise in holiday-package prices, and ins. and financial services, up 1.7%.

Two segments bucked the trend: Furnishings and household equipment fell 0.6% y-o-y, while clothing and footwear declined 0.5%.

Our take: The fourth straight month at 1.8% follows the same framework MT Trading’s Ahmed Chreim set out on July’s figures: Stable inflation shows Saudi macro management is, so far, absorbing the geopolitical shock. Inflation is driven by rents and construction, not energy; oil has kept moving via the Red Sea rather than a throttled Hormuz; and reserves and price-monitoring have cushioned the pass-through. The IMF made the same case in July, projecting inflation near 2% and averaging 2.3% for 2026. Four flat readings suggest those buffers have held.

But the buffers have limits. Both assessments rested on the disruption staying contained and oil flowing around the chokepoints, conditions that have been blown apart. This past week has brought drone strikes on Saudi soil, extensive damage to the East-West pipeline, and a Houthi advance toward Bab Al Mandab. The IMF’s benign outlook came with a condition — “unless the conflict broadens and causes more significant disruptions to supply chains and import costs.” August’s data predates all of it, as does any pass-through from the shipping and ins. costs that have since spiked.

More from the macro tables

Wholesale prices edged down: The wholesale price index (pdf) increased 4.6% y-o-y in August, down from 5.0% in July. The figure was mainly driven by an 8.2% rise in other transportable goods — including a 51.4% jump in basic chemicals and a 4.0% increase in refined petroleum products. Prices of metal products, machinery, and equipment also rose by 2.2%, while agriculture and fishery product prices increased by 4.8%.

Manufacturing costs cooled too: The producer price index (pdf) rose 5.3% y-o-y in July, down from 8.5% in June. Driving the index for the month was a 5.5% rise in manufacturing prices, a 2.3% increase in electricity, gas, steam, and air-conditioning supply, and a 6.8% increase in water supply, sewerage, and waste management activities.