June 13, 2010 – Saudi Arabia’s annualized inflation increased to 5.4 percent in May, the fastest pace since May 2009. According to the Central Department of Statistics and Information, inflation rose from the level of 4.9 percent in April due to higher food prices and rents, with consumer prices registering a 0.6 percent rise in May compared to a 0.3 percent increase in April. Rent, fuel, and housing-related services rose 9.4 percent in May, making a 1.1 percent increase from April. For food and beverages, the index rose 5.4 percent year-on-year and 0.1 percent on the month.

The cost of living index in the Kingdom stood at 127.8 points last month, up from 127.1 points in April. Nonetheless, the inflation rate remains lower from a record high of 11.1 in July 2008. Rising demand for housing, which is expected to increase due to population growth, is keeping inflation rates at four times historic averages despite the global recession. Industry experts predict that inflation in the Kingdom will ease in 2010, yet will remain higher than its historic average of 1 percent as the government continues to pursue expansionary budgets.