[2007-08-16]  Inflation in Saudi to hit 2.8pc
RIYADH: Inflation in Saudi Arabia is likely to increase to 2.8 per cent this year, from 2.2 per cent the previous year, Al-Rajhi Bank & Investment said in a report.

"In 2007, consumer and investment demand, especially in the construction sector, is likely to continue putting upwards pressure on prices," the Gulf's largest lender by market value said in its July monthly report.

"Furthermore, bottlenecks in the labour market contributed significantly to the upward pressures on prices as the costs of labour and materials have increased," it added.

Saudi inflation rose to a five-month high of 3.1pc in June as food and housing costs climbed, official data showed.

Analysts say a declining dollar has also played a role, although the government of the world's largest oil exporter has ruled out a revaluation of its dollar-pegged currency.

US bank Citigroup said in a research report this month that Saudi inflation would average about 2.7pc this year.

It said government investment in infrastructure was driving up construction costs and that rising prices could force the government to cut prices on some commodities.

Source: Copyright © 2007 Gulf Daily News