Saudi Arabia's inflation rate stabilized at 1.8% year-on-year in June, the same level recorded in May.

The stabilization of inflation in June coincided with the food and beverages sector accelerating to its highest level since last October, at 1.4% year-on-year, driven by rising food prices.

In contrast, the housing and electricity sector—the second most influential component in the index—continued to slow, with rents recording their lowest increase in 44 months at 4.4%, extending the slowdown for the 19th consecutive month.

Mon, 15 2026

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This comes in the 13th month after the directive of Saudi Crown Prince Mohammed bin Salman, issued at the end of last March, which outlined five measures to achieve balance in the real estate sector in the capital, while the Saudi government froze rent increases in Riyadh for five years starting from last September 25.

The real estate balance measures came against the backdrop of record increases in land prices and rents in Riyadh over the past years.

Rent inflation had come with increasing demand for housing alongside global companies establishing regional headquarters in Saudi Arabia, creating housing demand from their employees, and slowing supply with a decline in construction activity and new residential mortgage financing.

The International Monetary Fund had attributed the rise in rents to inflows of foreign labor and major redevelopment plans in Riyadh and Jeddah.

In its 2025 Article IV consultation report, the Fund indicated that inflation in Saudi Arabia remains under control, expecting it to stay near its target level of 2% with a slowdown in housing rents.

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Tue, 30 2025

Medium-term Saudi inflation expectations

Saudi Arabia's inflation rate accelerated to 2% in 2025, up from 1.5% in 2024. Finance Ministry forecasts indicate inflation stabilizing this year at 2%, then 1.8% in 2027, before rising slightly to 1.9% in 2028.

August 2020 peak of Saudi inflation

Saudi inflation peaked in August 2020 at 6.2% after the government raised value-added tax from 5% to 15% starting July 2020, as state revenues suffered from falling oil prices amid the COVID-19 pandemic. The inflation rate began to slow a year after the tax increase as its effect faded.

Food and beverages top the weights

Since last August's data, the General Authority for Statistics adopted a new methodology for measuring inflation. According to the updated methodology, the 'food and beverages' sector became the largest weight in the index at 22%, after being second at 18.8% previously, while the weight of 'housing, water, electricity, and gas' dropped to second largest at 19.5%, down from 25.5%.

The transport sector maintained its third position at 14.8%, compared to 13% previously. A new sector called 'insurance and financial services' was introduced with a weight of 5.8%, at the expense of the 'personal care, social protection, and other goods and services' sector, whose weight dropped to 5.8% from 12.6%.

Financial Analysis Unit