Saudi Arabia’s inflation rate accelerated to 2.3% in June compared to the same month last year. This marks a slight increase from May’s 2.2%, according to recent government data. Notably, Saudi Arabia’s inflation rate has remained between 2% and 2.3% since the start of 2024.
The primary driver behind the rising inflation remains soaring housing rents. Specifically, villa prices jumped by 7.1%, pushing overall housing rent costs up by 7.6%. Consequently, the combined category of housing, water, electricity, gas, and other fuels surged by 6.5%.
Furthermore, last month, the Saudi government introduced measures to stabilize Riyadh’s real estate market. These steps include reserving price-capped plots exclusively for Saudi citizens. Additionally, authorities recently approved a new Real Estate Ownership and Investment Law.
The new law, set to take effect next year, will simplify property purchases for foreigners. Experts believe this move could help balance supply and demand in the long term. However, its success hinges on timely completion of major real estate projects under Vision 2030.
Meanwhile, Saudi Arabia continues developing massive new urban projects around Riyadh. These initiatives aim to diversify the economy away from oil while boosting tourism and private sector growth.
The International Monetary Fund (IMF) forecasts Saudi Arabia’s inflation rate to stay near 2% in the coming months. Key factors supporting this stability include the riyal’s peg to the U.S. dollar, domestic subsidies, and flexible expatriate labor supply.
In summary, rising housing costs remain the dominant force behind inflation. While new policies may ease long-term pressures, short-term challenges persist. As Saudi Arabia pushes forward with economic reforms, market watchers will closely monitor inflation trends.
