Saudi inflation driven up by food and vehicle prices as VAT hangover lingers

Published 15 Jun,2021 via Arab News - Economy RIYADH - Saudi inflation rose for a second straight month as the consumer price index hit 5.7 percent.

Prices rose 5.3 percent the previous month according to data from the General Authority for Statistics.

The pickup in inflation highlighted the continuing impact of higher value added tax (VAT) which was increased to 15 percent in July 2020 from 5 percent before.

Transport prices also increased by 19.3 percent, led by the rising cost of buying a vehicle.

However food and beverage prices were the main driver in the rising cost of living, rising by 7.3 percent. Food represents a weighting of 17 percent in the Saudi consumer basket that economists use to measure the cost of living in the country.

“In particular, the increase in the prices of meat (6.8 percent) and vegetables (6.7 percent) was remarkable. Food prices were the main driver of the inflation rate in May 2021.” the authority said in a statement.

Food prices are accelerating across the Arab world with Egypt this week also reporting a pick-up in inflation to 4.8 percent year-on-year in May, up from 4.1 percent the previous month. It comes as the United Nations Food Agency predicts a double-digit spike in global food import costs this year.

Copyright © Saudi Research & Publishing Co. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info)

DISCLAIMER: This content is provided to us “as is” and unedited by an external third party provider. We cannot attest to or guarantee the accuracy of information provided in this article from the external third party provider. We do not endorse any views or opinions included in this article.