Government Measures Bring Down Inflation in Saudi Arabia to 2.2% in September

17/10/2025 03:20 AST

Saudi Arabia's annual inflation rate slowed to 2.2% in September, down from 2.3% in August, reflecting the impact of recent government measures aimed at easing price pressures, particularly in the housing sector.

The deceleration came alongside a noticeable moderation in residential rental price increases. According to the latest data, prices in the housing, water, electricity, gas and other fuels category rose by 5.2%, food and beverages by 1.1%, and restaurants and accommodation services by 1.5%. Notably, housing rents declined from an annual increase of 7.6% in August to 6.7% in September, helping to slightly reduce the overall Consumer Price Index (CPI).

This follows government action to limit rent increases, including a five-year freeze on rent hikes in Riyadh. The decision came as part of a directive from Mohammed bin Salman Al Saud, Crown Prince and Prime Minister, to implement a package of regulatory reforms for the local housing market.

The Saudi government projects inflation to remain relatively stable at an average of 2.3% this year, below many global inflation rates. The International Monetary Fund forecasts the Kingdom's inflation rate at 2.1% in 2025 and 2.0% in 2026.

Experts believe inflation will continue to ease in the coming period as rental regulations take effect. Dr. Osama bin Ghanem Al-Obaidi, an international trade law consultant, told Asharq Al-Awsat that the housing, water, electricity, gas and other fuels category had a decisive impact on CPI.

Its growth slowed to 5.2% in September from 5.8% in August, while rent inflation declined from 7.6% to 6.7% over the same period. This moderation helped reduce monthly inflation by 0.1%.

Economic analyst Ahmed Al-Shehri said that legal measures to regulate the relationship between landlords and tenants will restore balance to the rental market, particularly in Riyadh, where rents had climbed sharply.

He added that because housing and utilities make up the largest component of CPI, such measures are expected to play a major role in reducing inflation.

According to data from the General Authority for Statistics (GASTAT), housing-related costs rose by 5.2% in September 2025, driven by a 6.7% increase in actual housing rents. Food and beverage prices climbed 1.1% year-on-year, largely due to a 0.6% rise in fresh, chilled, or frozen meat prices. Restaurant and accommodation services increased by 1.5%, fueled by higher accommodation costs.

Personal care and social protection expenses jumped 5.4%, with personal luggage prices soaring 16.3%. Transport costs rose 1.6%, mainly due to a 6.9% increase in passenger transport services.

On the other hand, furniture and household appliances declined 0.6%, driven by a 3.2% fall in furniture and carpet prices. Information and communication costs also dropped by 0.4%, reflecting a 6.4% decrease in ICT equipment prices.

On a monthly basis, CPI edged down 0.1% from August. Transport prices declined 0.4%, restaurants and accommodation services fell 0.9%, while furniture, recreation, clothing, and financial services all recorded a 0.3% drop.

Asharq Al Awsat