Saudi consumer prices fall for third straight month in March

Saudi Arabia’s annual consumer price index fell for the third month in a row in March as prices of housing, water and energy declined sharply.

The CPI index for March fell 2.1 per cent from a year earlier and 0.1 per cent from February, data from the General Authority for Statistics showed on Tuesday.

The housing, water, electricity and fuel component of the index dropped 8.1 per cent from a year earlier, while clothing and footwear slid 1.5 per cent.

The sub-index covering restaurants and hotels rose 1.5 per cent while the education and food and beverages components were higher 1.2 per cent from a year earlier.

“We believe deflation will persist in Saudi in 2019 but should normalise in the medium-term,” said Maya Senussi, Senior Middle East Economist at Oxford Economics.

“Currently the bulk of the drag comes from the weakness in the housing and utilities category, a story that is not unique to Saudi Arabia.”

January’s fall in annual CPI was the first since 2017. It partly reflected the fading impact of last year’s introduction of a value-added tax (VAT).

The UAE, which also started charging VAT at the start of 2018, saw a 2.39 per cent drop in its annual consumer price index in January.

Property rental prices are falling in the UAE and Saudi Arabia, the region’s biggest economy, as a result of UAE real estate oversupply and job losses in Saudi.