Annual inflation slightly accelerated to 2.3% y-o-y in August, up 0.2 percentage points from July and the highest level in two year, according to the General Authority for Statistics’ (Gastat) latest consumer price index (pdf). The increase was driven by a 5.8% increase in prices of housing, water, electricity, gas, and other fuels.

The reading comes as Gastat updated the index’s methodology, setting 2023 as the new reference year and revising the basket’s items and weights based on the 2023 household income and expenditure survey. The update expanded the number of items from 490 to 582, widened coverage from 16 to 23 cities, and cut the weight of housing, water, electricity, gas, and other fuels from 25.5% to 19.5%, while raising the weight of food and beverages from 18.8% to 22%, making it the heaviest component in the index.

On a monthly basis, consumer prices rose 0.1% in August, primarily due to a 0.4% rise in the housing water, electricity, gas, and fuel sector, driven by a 0.6% rise in actual housing rent prices. Gastat’s full report on August’s average prices of goods and services is available here (pdf).

Rent would not let up yet: Housing, water, electricity, gas, and other fuels saw a 5.8% y-o-y increase during the month. Rents paid for housing drove the increase, rising 7.6% y-o-y.

Food and beverage prices also inched up 1.1% y-o-y, supported by a 1.5% rise in fresh or chilled meat prices. Personal care, social protection, and other goods and services rose 4.8% y-o-y, stemming from an 18.0% surge in jewelry and watch prices.

ALSO- Restaurants and accommodation services prices climbed 3.0% y-o-y, mainly due to a 4.7% rise in accommodation service prices. Transport prices rose 1.2% y-o-y, driven by a 5.3% increase in passenger transport prices.

On the decline: Furnishings, household equipment, and routine household maintenance prices fell 0.3% y-o-y, largely due to a 3.3% drop in furniture, furnishings, and carpet prices. Meanwhile, information and communication prices decreased by 0.4%, weighed down by a 6.7% decline in information and communication equipment prices.

LOOKING AHEAD- Riyad Capital sees inflation rising to 2.5% this year, before easing slightly to 2.3% in 2026. Meanwhile, the IMF said in June that inflation in Saudi Arabia will remain around 2% this year, supported by the currency’s peg to the USD, domestic subsidies, and a flexible labor supply.

WHOLESALE PRICE INDEX-

Producer prices rose 2.1% y-o-y in August, unchanged from July, according to Gastat’s wholesale price index (pdf). This was driven by a 4.2% increase in other transportable goods, except metal products, machinery, and equipment, as well as a 4.4% rise in agricultural and fishery products.

Wholesale prices inched up 0.2% m-o-m during the month, supported by higher metal products, machinery, and equipment prices, which were up 0.2% on the back of a 0.9% increase in transport equipment and a 0.7% rise in fabricated metal products. The monthly uptick was further driven by a 0.4% m-o-m rise in other transportable goods, fueled by a 3.3% increase in basic chemicals and a 0.2% rise in other chemical products and artificial fibers.

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