The latest data released by the General Authority for Statistics reveals positive indicators for the Saudi economy. The annual inflation rate in Saudi Arabia slowed to 1.8% in January, its lowest level in 11 months. These figures reflect the success of the Kingdom's fiscal and monetary policies in curbing price increases and maintaining market stability despite global economic challenges.
Details of the Consumer Price Index in Saudi Arabia
According to the official report, the Consumer Price Index (CPI) recorded an annual increase of 1.8% during January 2026 compared to the same month of the previous year, 2025. This relative stability is a vital indicator of the strength of the local economy and its ability to adapt to changes, which enhances the attractiveness of the investment environment in the Kingdom and supports the purchasing power of citizens and residents.
Key drivers of inflation: Housing takes center stage
Upon closer analysis, the recorded inflation is primarily attributed to the housing, water, electricity, gas, and other fuels sector, which saw a 4.2% increase. This rise is mainly due to a significant 5.2% increase in "actual housing rents." Given the substantial weight of the housing sector in the consumer price index basket, any movement in this sector has a direct and tangible impact on the overall inflation index.
In a related context, other sectors also recorded varying increases that contributed to the overall rate. Transportation prices rose by 1.5%, driven by a 6% increase in passenger transport services. Restaurant and hotel prices also climbed by 1% due to higher catering costs. Notably, the personal care and social protection sector saw a significant jump of 7.9%, fueled by a 28.1% surge in jewelry and watch prices, which is often linked to movements in gold and precious metal prices in global markets.
Economic stability and its impact on markets
On the other hand, some sectors helped mitigate inflation, with home furnishings and equipment prices decreasing by 0.3%, and healthcare prices declining slightly by 0.1%. This discrepancy between rising service prices (such as housing and transportation) and decreasing or stable consumer goods prices reflects the dynamics of supply and demand in the Saudi market.
On a monthly basis, the index recorded a very slight increase of 0.2% in January 2026 compared to December 2025, indicating short-term price stability and the absence of immediate sharp fluctuations. Maintaining inflation rates at acceptable levels (below 2%) is a strategic objective for central banks globally, confirming the Kingdom's success in managing its economic portfolio with high efficiency, in line with the goals of Saudi Vision 2030 to diversify the economy and ensure fiscal sustainability.
