A report issued by the General Authority for Statistics showed that the consumer price index in Saudi Arabia increased to 6.1 percent in July compared to the same period of the previous year, as a result of a three-fold increase in value-added tax.
The inflation rate in June was 0.5 percent, the lowest annual increase since January, before the value-added tax increased to 15 percent from 5 percent beginning from 1st of July.
The reasons for the annual jump in annual inflation are due to the increase in prices for most groups, as food recorded the largest contribution, at 14.6%, and then transportation, at 7.3%. According to a research note by "Capital Economics", the impact of raising the value-added tax may be relatively limited compared to the introduction of the tax for the first time in 2018. However, the rate of inflation in Saudi Arabia is expected to jump between 5.5 and 6 percent on an annual basis this month. And to stay near that level for most of next year. Saudi Arabia is the largest oil exporter in the world, and in May it announced a three-fold increase in value-added tax, in an effort to boost public finances affected by the double shock of the Coronavirus pandemic and lower oil prices.
Source (CNBC Arabic site, Edited)
