RIYADH, Oct 18 (Reuters) - Inflation in Saudi Arabia rose to an annual 4.4 percent in September from 4.1 percent in August, its first increase in four months, which coincided with the month of Ramadan, which typically increases consumer demand.
The kingdom's cost of living index was 123.5 points in September up from 118.3 points a year earlier, the data published by the official statistics authority showed. The index was at 122.7 in August.
The Muslim fasting month of Ramadan began on Aug. 22, and analysts had been expecting it to cause a spike in food prices in September as families stock up for more elaborate evening meals.
'It looks like we are approaching the bottom of around 4.5 percent, but that is on the lower side as it could very well be 5 percent (for 2009),' said John Sfakianakis, chief economist at Banque Saudi Fransi, affiliated to French Credit Agricole Group.
The dollar, to which Saudi Arabia pegs its riyal currency, has been under downward pressure, which could boost the cost of imports for the major oil exporter, which relies heavily on imports to cater for its food needs.
This, combined with a recovery in commodity prices, could reverse the recent trend of lower inflation.
'In some ways... the dollar decline could be a factor in spiking inflation, but we have to wait and see the full effects of this in the coming few months,' Sfakianakis said.
The annual rise in home rents stood at 14.6 percent in September, the data showed, against 15.6 percent in August.
Government spending could also add to inflation. Saudi Arabia said last year it would invest around $400 billion in the next five years, mainly in infrastructure as it seeks to counter the repercussions of the global crisis.
(Reporting by Souhail Karam and Raissa Kasolowsky, Editing by Natsuko Waki/Will Waterman) Keywords: INFLATION SAUDI (souhail.karam@thomsonreuters.com, +966 1 463 2603; Reuters Messaging: souhail.karam.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The kingdom's cost of living index was 123.5 points in September up from 118.3 points a year earlier, the data published by the official statistics authority showed. The index was at 122.7 in August.
The Muslim fasting month of Ramadan began on Aug. 22, and analysts had been expecting it to cause a spike in food prices in September as families stock up for more elaborate evening meals.
'It looks like we are approaching the bottom of around 4.5 percent, but that is on the lower side as it could very well be 5 percent (for 2009),' said John Sfakianakis, chief economist at Banque Saudi Fransi, affiliated to French Credit Agricole Group.
The dollar, to which Saudi Arabia pegs its riyal currency, has been under downward pressure, which could boost the cost of imports for the major oil exporter, which relies heavily on imports to cater for its food needs.
This, combined with a recovery in commodity prices, could reverse the recent trend of lower inflation.
'In some ways... the dollar decline could be a factor in spiking inflation, but we have to wait and see the full effects of this in the coming few months,' Sfakianakis said.
The annual rise in home rents stood at 14.6 percent in September, the data showed, against 15.6 percent in August.
Government spending could also add to inflation. Saudi Arabia said last year it would invest around $400 billion in the next five years, mainly in infrastructure as it seeks to counter the repercussions of the global crisis.
(Reporting by Souhail Karam and Raissa Kasolowsky, Editing by Natsuko Waki/Will Waterman) Keywords: INFLATION SAUDI (souhail.karam@thomsonreuters.com, +966 1 463 2603; Reuters Messaging: souhail.karam.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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