Saudi inflation increases in August to 6.1pct

Saudi Arabian inflation accelerated for a seventh month to reach 6.1 per cent in August as the costs of food and rent rose. Consumer prices increased 0.6 per cent from July, the state-run Saudi Press Agency said on its website today. Rent, fuel and water prices gained an annual 8.9 per cent while the costs of food and drinks rose eight per cent, SPA said.

The central bank in Saudi Arabia, the Arab world’s biggest economy, said last month that it expects inflationary pressures to persist in the third quarter as growth accelerates. The government is forecasting economic expansion of more than four per cent this year after growth of 0.6 per cent in 2009. Accelerating inflation since late 2009 doesn’t warrant a “different course of action” in monetary policy, central bank Governor Muhammad Al Jasser said in May. The central bank cut the repurchase rate to two per cent last year, the lowest since 2004, and the reverse repurchase rate to 0.25 per cent.