Saudi Arabia’s inflation rate rose to 2.3% in June, compared to the same month last year, slightly up from 2.2% in May, according to government data released Tuesday.
Since the start of the year, inflation has fluctuated between 2.0% and 2.3%, largely due to rising housing rental costs. In June 2023, inflation stood at 1.5%.
The General Authority for Statistics reported that housing rents increased by 7.6%, driven by a 7.1% rise in villa rental prices. Housing was the main contributor to the 6.5% increase in the broader housing-related category, which includes water, electricity, gas, and other fuels.
In response to rising prices, the Saudi government recently introduced measures to stabilize Riyadh’s property market. These include designating price-capped residential plots for Saudi citizens.
Additionally, a newly approved Real Estate Ownership and Investment Law—set to take effect next year—will make it easier for foreigners to purchase property in the country.
These reforms come as Saudi Arabia pushes ahead with large-scale development projects in and around Riyadh, part of its Vision 2030 initiative to diversify the economy away from oil, boost tourism, and strengthen the private sector.
While the new law may help balance housing supply and demand over time, its success depends on the timely completion of ongoing real estate developments.
The International Monetary Fund (IMF) projects Saudi inflation will remain stable at around 2%, supported by factors such as the riyal’s peg to the U.S. dollar, ongoing government subsidies, and a flexible supply of expatriate labor.
