Saudi consumer prices fall year-on-year in May for fifth month in a row

Saudi Arabia’s consumer prices fell in May from a year earlier for the fifth month in a row, but the consumer price index (CPI) rose marginally from April, government data showed on Wednesday.

The CPI index fell 1.5 per cent in May on an annual basis and was up 0.1 per cent from April, data from the General Authority for Statistics showed.

The annual CPI decline has partly reflected the fading impact of last year’s introduction of a value-added tax (VAT), economists have said.

Wednesday’s data showed the sub-index for housing, water, electricity, gas and fuel prices fell 7.5 per cent from a year earlier. The sub-index had fallen 7.8 per cent in April.

Prices for food and drinks, however, rose 1.8 per cent, higher than the pace seen in April, and prices for education rose 1.3 per cent, at the same pace registered in April.

Economists still expect deflation in 2019 after prices rose throughout 2018 following the introduction of the VAT, which was imposed to boost non-oil revenue in response to a long-term drop in oil prices.

Capital Economics expect Saudi CPI to fall 1.3 per cent in 2019, while Abu Dhabi Commercial Bank’s projects the CPI index to decline 0.9 per cent this year.