Saudi Arabia’s Inflation Rises 2% in January, Driven by Housing Costs

Saudi Arabia’s consumer prices rose by 2% in January 2025 compared to the same period last year, with housing costs emerging as the primary driver of inflation, according to the General Authority for Statistics (GASTAT).

A significant 9.7% increase in housing rents and a 7.7% rise in villa rental costs contributed to an overall 8% surge in housing, water, electricity, gas, and fuel prices. Given that the housing sector accounts for 25.5% of the total consumer price index, this sector played a major role in sustaining inflationary pressures.

Despite global economic challenges, inflation in the Middle East remains relatively stable. In December 2024, inflation stood at 2.89% in the UAE, 0.24% in Qatar, and 0.50% in Bahrain. A World Bank report in October forecasted Saudi Arabia’s inflation rate to remain at 2.3% in 2025, lower than the Gulf Cooperation Council (GCC) average.

Consumer Price Trends in Key Sectors

While housing costs surged, other consumer price shifts were more moderate:

• Food and beverages rose 0.8%, largely due to a 5.6% increase in vegetable prices.
• Personal goods and services saw a 3.3% rise, with jewelry prices jumping 21.6%.
• Restaurants and hotel costs increased 0.8% year-on-year.
• Furniture and home equipment expenses declined by 2.4%.
• Clothing and footwear prices fell by 1.5%.
• Transportation costs dropped by 1.9%.

On a month-on-month basis, Saudi Arabia’s consumer price index remained stable, recording a marginal 0.3% increase from December 2024.

• Housing rents and food prices both increased 0.3% compared to December.
• Transportation costs rose 0.5%, while clothing and footwear prices inched up 0.1%.
• Communication expenses declined by 0.3%, and education costs dropped 0.1%.

Wholesale Prices See Moderate Increase

In a separate report, Saudi Arabia’s Wholesale Price Index (WPI) increased by 0.9% year-on-year in January.

• The rise was driven by a 1.5% increase in the prices of transportable goods and a 4.6% surge in agriculture and fishery products.
• In contrast, food products, beverages, tobacco, and textiles dropped by 0.3%, while metal products, machinery, and equipment declined by 0.2%.

On a monthly basis, wholesale prices rose 1.7% from December, attributed to a 4.1% increase in transportable goods prices. Meanwhile, metal goods and machinery fell by 0.2%, and ores and minerals dipped by 0.1%.

With inflation levels projected to remain steady, analysts expect Saudi Arabia’s economy to maintain resilience amid global economic fluctuations.