Saudi Arabia, the Arab world’s largest economy, may see inflation pressures ease in the first quarter as the prices of food and beverages stabilize, the central bank said.
“Inflationary pressure in the kingdom is expected to continue during the first quarter of 2010 but at a lesser level than in the fourth quarter of 2009,” the central bank wrote today in its quarterly inflation report. Some pressures will persist due to housing costs, the central bank said.
Inflation in the kingdom slowed to 5.1 percent in 2009 compared with 9.9 percent in 2008 as crude prices fell from a peak of $147 and the global economic crisis crimped consumer demand. Since July, inflation has held at around 4 percent. Central bank governor Muhammad al-Jasser said last month conditions were still not ripe for interest rate increases.
The Gulf Arab state is currently finalizing a mortgage law that is expected to kick-start lending in the country and boost the real-estate sector.END
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