Saudi Arabia sees deflation for third month in a row

Saudi Arabia’s inflation rate for March remained in negative territory for the third consecutive month at -0.4 percent, the latest figures from the General Authority for Statistics (GAS) showed.

The cost of living index declined to 136.7 points in March compared to 137.3 points in the same month last year.

Food and beverages category fell by 2.7 percent year-on-year (YoY), followed by transport (-2.5 percent), recreation and culture (-1.8 percent) and restaurants and hotels (-1 percent).

“We expect inflation to return to positive territory soon, before jumping up in the middle of the year once the new subsidy cuts have been implemented,” said Jason Tuvey, Middle East economist at Capital Economics.

An expected new round of subsidy cuts by mid-year and the application of value-added tax in 2018 should ease deflation expectations, he added.