Saudi Arabia’s 2012 Annual Inflation Forecast at 4.8%, NCB Says

Saudi Arabia’s average annual inflation is forecast to slow to 4.8 percent this year and 4.5 percent next year, National Commercial Bank said in an e-mailed report.

“The liquid state of the economy suggests that prices should remain somewhat contained without raising concerns for policy makers,” the Jeddah-based bank said yesterday. Average inflation last year was 5 percent, according to data compiled by Bloomberg.

Inflationary pressures in the kingdom, the Arab world’s largest economy, are expected to stabilize in the third quarter as global increases in food costs slow and inflation eases in other countries, the Saudi Arabian Monetary Agency said in a report on its website last month. Inflation in August slowed to 3.8 percent from 4 percent in July, the lowest level in almost three years, as food and beverages and housing, fuel and water costs eased, the Central Department of Statistics said Sept. 12.

Saudi Arabia’s economy grew 7.1 percent last year, buoyed by higher oil prices and a government spending spree aimed at preventing the kind of political unrest that has spread across most Arab countries. The kingdom’s economy expanded 5.5 percent in the second quarter from a year earlier, the slowest pace since at least 2010, as oil prices declined, the statistics department said on Sept. 13

To contact the reporter on this story: Glen Carey in Riyadh at gcarey8@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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