Saudi consumer prices fall for third straight month in March

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Time: April 23, 2019   

DUBAI, April 23 (Reuters) – Saudi Arabia’s annual consumer price index fell for the third month in a row in March as prices of housing, water and energy declined sharply.

The CPI index for March fell 2.1 percent from a year earlier and 0.1 percent from February, data from the General Authority for Statistics showed on Tuesday.

The housing, water, electricity and fuel component of the index dropped 8.1 percent from a year earlier, while clothing and footwear slid 1.5 percent.

“We believe deflation will persist in Saudi in 2019 but should normalise in the medium-term,” said Maya Senussi, Senior Middle East Economist at Oxford Economics.

“Currently the bulk of the drag comes from the weakness in the housing and utilities category, a story that is not unique to Saudi Arabia.”

January’s fall in annual CPI was the first since 2017. It partly reflected the fading impact of last year’s introduction of a value-added tax (VAT).

The United Arab Emirates, which also started charging VAT at the start of 2018, saw a 2.39 percent drop in its annual consumer price index in January.

Property rental prices are falling in the UAE and Saudi Arabia, the region’s biggest economy, as a result of UAE real estate oversupply and job losses in Saudi.

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