Saudi consumer spending improves in July, says Al Rajhi Cap

Saudi Arabia's consumer spending picked up in July, based on the recent point-of-sale (POS) transactions and ATM data, Al Rajhi Capital said in a new report.

POS transactions jumped 12.8 percent YoY in July 2017, compared to the annual drop of 0.8 percent in June. Meanwhile, ATM transactions rose by 2.4 percent YoY in the same period versus a decline of 11.4 percent YoY in the previous month.

"The improvement in consumer spending could be partially attributed to the reinstatement of allowances for public sector employees," the brokerage firm added.

Spending increased mainly on transportation, with a 24 percent rise y-o-y, food & Beverages (+18.2 percent y-o-y). Spending in the clothing & footwear sector, however, fell by 18.2 percent y-o-y.

Meanwhile, deflation remained in July, on the back of a continued drop in food and beverages sector along with the fall in transport and clothing/ footwear sectors.

"Despite the rise in POS transaction value, we believe inflation is being weighed down by benign global commodity prices impacting ‘Food and Beverage’ sector inflation and weakness in housing and discretionary sectors (Transport, Restaurants, Clothing and Footwear)," Al Rajhi Capital said.

The Kingdom saw further improvement in its fiscal position in Q2 2017, with its fiscal deficit declining to SAR 46.5 billion as against SAR 58 billion last year, backed by the 6 percent YoY rise in revenue and a 1 percent YoY fall in expenses.