Saudi Arabia’s inflation rate fell to 4.9 percent in March from 5.2 percent the previous month, easing further to its lowest since authorities hiked value-added tax last year to increase non-oil revenues as crude prices declined.
“Consumer prices still reflect an increase of the Value Added Tax (VAT) from 5 percent to 15 percent in July 2020,” the General Authority for Statistics said.
The annual 4.9 percent increase was mainly due to food and transport prices, which rose 10.2 percent and 10.5 percent respectively, it said.
Annual inflation was 3.4 percent in 2020, picking up in the second half of the year after the VAT hike. The first half had seen mild inflation, following a deflationary trend in 2019, when the annual rate was -2.1 percent.
The economy of the world’s top oil exporter shrank 4.1 percent last year, but the rate of decline slowed in the third quarter as some COVID-19 restrictions were lifted.
The economy is expected to grow 2.9 percent this year, the International Monetary Fund has estimated. It has forecast consumer price inflation will average 2.7 percent this year.