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Reuters
Official data showed today, Thursday, that the annual inflation rate in Saudi Arabia rose to 6.2% in June from 5.7% in May, the highest rate this year.
June saw the third consecutive monthly increase, highlighting the impact of an increase in value added tax imposed last year.
The General Statistics Authority said: “It should be noted that the consumer price index still reflects the increase in value added tax from 5% to 15%, which began to be applied in July. 2020, and this increase is attributed to the increase in transport prices by 22.6% and food and beverage prices by 8.1%.
The increase in the value-added tax came as the Saudi government seeks to bolster state coffers that have been depleted by the double shock of last year’s drop in oil prices and the pandemic. COVID-19, in addition to voluntary cuts in oil production that have been enacted to help stabilize global prices.
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To help ease the rising cost of living, Saudi Arabia, the world’s largest oil exporter, last week set a limit on domestic gasoline prices in July.
The agency said consumer prices rose only 0.2% on a monthly basis in June.
London-based Capital Economics said inflation is expected to start coming down from July as the base effect of the value-added tax increase wears off relative to annual price comparisons.
His estimates indicate that the inflation rate will slow to around 1% to 1.5% on an annual basis.
The International Monetary Fund has said it expects annual inflation to average 3.2% this year.
Source: “Reuters”
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