Saudi Arabia’s annual consumer inflation rose to 1.8 per cent in May from 1.7 per cent in April, as housing and utility costs remained the main source of pressure on household budgets.The latest reading kept price growth moderate by global standards, but confirmed that rents and housing-related services are still shaping the Kingdom’s inflation path more than food or fuel. Prices for housing, water, electricity, gas and other fuels increased by 3.7 per cent year on year, driven by a 4.7 per cent rise in actual housing rents. The category made the largest contribution to the headline rate, adding about 0.7 percentage points to annual inflation.
Transport prices rose 1.5 per cent, while restaurant and accommodation services increased 1.7 per cent. Food and beverages, a key household expense, showed only limited pressure, rising 0.7 per cent annually and 0.1 per cent month on month. The muted food component helped contain the overall index despite steady demand across major cities and continued activity linked to tourism, construction and services.
The May figure also reflected a sharp rise in some discretionary and imported consumer items. Personal care, social protection and miscellaneous goods and services posted the strongest annual increase at 5.6 per cent. Within that division, other personal effects climbed 18.5 per cent, led by a 20 per cent increase in jewellery and watch prices, a movement closely tied to global gold prices and consumer demand for high-value goods.
Recreation, sport and culture prices rose 2.6 per cent, supported by a 4.3 per cent increase in holiday package costs. The rise came as travel and hospitality demand stayed firm before the summer season, adding price pressure to selected service categories. Furnishings, household equipment and routine home maintenance fell 0.5 per cent, while clothing and footwear slipped 0.1 per cent, partially offsetting increases elsewhere in the consumer basket.
On a monthly basis, the consumer price index increased 0.2 per cent in May. Transport recorded the largest monthly rise, up 0.6 per cent, mainly because passenger transport services increased 1.9 per cent. Housing, water, electricity, gas and other fuels rose 0.2 per cent from April, while food and beverages edged up 0.1 per cent. Monthly declines were recorded in personal care and miscellaneous goods and services, furnishings and clothing.
The persistence of housing-led inflation highlights the supply-demand imbalance in the Kingdom’s largest urban centres, particularly Riyadh, where population growth, corporate relocation and Vision 2030-linked investment have lifted demand for residential and commercial space. Authorities moved last year to freeze rent increases in Riyadh for five years, applying the measure to residential and commercial properties within the capital’s urban boundary. The policy aims to stabilise leasing costs, improve transparency through registered rental contracts and ease pressure on tenants.
The rent component is expected to remain closely watched because it carries a heavy weight in the consumer basket and affects both nationals and expatriate workers. Saudi Arabia’s transformation programme has accelerated job creation in construction, tourism, logistics, entertainment and financial services, attracting workers and companies into Riyadh, Jeddah, Dammam and other economic centres. That momentum has supported non-oil growth but has also tightened housing supply in key districts.
Wholesale price data pointed to stronger pipeline pressures than the consumer index. The Wholesale Price Index rose 4.6 per cent year on year in May and 1.2 per cent from April. The annual increase was mainly linked to a 9.1 per cent rise in other transportable goods, excluding metal products, machinery and equipment. Basic chemicals surged 59 per cent, while refined petroleum products increased 3.9 per cent. Metal products, machinery and equipment rose 1.5 per cent, driven by higher basic metals and electrical machinery prices.
Agriculture and fishery product prices increased 3 per cent annually, helped by gains in agricultural products and live animals. Food products, beverages, tobacco and textiles declined 0.1 per cent, reflecting lower prices for grain mills, starch and dairy products. Ores and minerals also fell 0.6 per cent.
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Saudi Arabia