SAMA predicts higher inflation in Q3 on fiscal consolidation

The Saudi Arabian Monetary Authority (SAMA) expects inflation to increase in the third quarter of 2018 on the implementation of a number of fiscal reforms including the introduction of a 5 percent value-added tax, a cut in energy subsidies and the enactment of the expat fees.

The Hajj season is also expected to boost local demand, which may weigh on the inflation rate, the Kingdom’s central said.

According to the International Monetary Fund’s (IMF) forecasts, prices of agricultural products will likely drop by 2.7 percent in 2018, while metals and energy prices are estimated to fall by 2 percent and 1.6 percent respectively.

Meanwhile, prices of food & beverages are seen to rise by 1 percent.