Jun 15, 2025, 1:57 PM
Jun 15, 2025, 1:57 PM

Saudi inflation rises to 2.2 percent as rental prices surge

Provocative
Highlights
  • Saudi Arabia's annual consumer inflation rose to 2.2 percent in May 2025, driven mainly by increased rental prices.
  • Rental costs surged by 8.1 percent, with villa prices increasing by 7.1 percent, signaling demand pressure in the rental market.
  • The economic landscape reflects ongoing developments in the non-oil sector and the Kingdom's efforts to achieve its Vision 2030 goals.
Story

In May 2025, Saudi Arabia experienced an annual consumer inflation rate of 2.2 percent, influenced primarily by rising rental prices. The General Authority for Statistics (GASTAT) reported that housing rent contributed significantly to this increase, with an 8.1 percent annual rise in rents. Additionally, villa rental prices surged by 7.1 percent, indicating strong demand pressures within the residential rental market. The stability of the consumer price index was underscored by a modest 0.1 percent increase compared to April 2025. This stability resulted from various factors, including a 0.3 percent rise in the costs associated with housing, water, electricity, gas, and other fuels, largely attributed to a 0.4 percent hike in actual housing rent prices that month. Forecasts indicated that the overall costs of food and beverages saw a slight annual increase of 0.1 percent, alongside personal goods and services which rose by 0.5 percent. A notable aspect of the price changes included a considerable annual jump of 4 percent in the personal goods and services category, propelled by a striking 24.4 percent increase in the prices of jewelry, watches, and precious antiques. This growth in personal goods meant that certain categories helped to mitigate the broader inflationary pressures on the index. Despite these inflationary pressures, Riyadh's economy is making strides towards achieving Vision 2030 reforms, with the non-oil sector contributing over half of the Kingdom's GDP. The economic landscape includes varied growth rates and changing dynamics that reveal how local and global factors affect domestic markets, making the inflation situation in Saudi Arabia not only a reflection of local economic conditions but also a response to broader trends in the region and the overall economy.

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