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Saudi Arabia’s inflation rate surged to 6.1% in July on VAT hike

Saudi Arabia’s inflation rate surged to 6.1% in July on VAT hike

Saudi Arabia increased its value-added tax from 5 per cent to 15 per cent on July 1

Saudi Arabia’s inflation quickened at the fastest pace since at least 2012 after the kingdom tripled its value-added tax.

Consumer prices rose an annual 6.1 per cent in July from 0.5 per cent in June, data released by the General Authority for Statistics showed on Sunday.

The increase was driven mainly by an acceleration in the cost of food and beverages – which rose more than 14 per cent compared with last year – and transport, which rose 7.3 per cent.

Reductions in fuel and gasoline prices offset the broader inflation pickup.

Saudi Arabia increased its value-added tax from 5 per cent to 15 per cent on July 1, part of the government’s measures to compensate for lower oil prices as the coronavirus pandemic and crude market turmoil cut deeply into state revenue.

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