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Riyadh: Heated debates are on over the continuing rise in prices of consumer products and how the authorities are dealing with the issue.
Some reports put the current rate of inflation in the kingdom at 6.5 per cent. Hamad Al Sayyari, governor of the Saudi Arabian Monetary agency (Sama), the kingdom's central bank, was quoted last month as saying that he expected inflation to remain stable at the previous year's level of 4.1 per cent. "I don't expect the inflation to rise but to remain stable," he said.
A report released by Sama last week noted that money supply, an indicator of future inflation, fell to 19.6 per cent in December 2007 from 21.6 per cent a month earlier.
Meanwhile, in statements to Gulf News, Saudi economic experts warned against the rise in prices of consumer products and real estate rents. They underlined the importance of government intervention to enact new laws to curb the inflation.
Abdul Rahman Al Zamel, an economic expert and member of the Shura Council, said that the rising inflation poses a major hurdle and both the private and public sector should give the utmost concern to the issue.
Saudi economist Abdul Rahman Al Hudairy said that the steps adopted earlier by the Saudi Cabinet would help in curbing inflation in the future. He said that the living standards index was up by 4.01 per cent in 2007.
"No doubt inflation is a global phenomenon and in the case of Saudi Arabia, the phenomenon is linked with outside factors and the recent decisions will assist in absorbing this phenomenon," he said.
He said the shortage of housing units is one of the key factors that exacerbates inflation in the kingdom, adding that real estates prices will remain as they are as there are no otherwise indicators.
Last month, the Saudi government strongly intervened to curb high living standards.
The Cabinet adopted 17 decisions, including increasing the public sector wages and pensions by five per cent for three years.
The five per cent so-called 'high living standards allowance' means that 12.1 billion Saudi riyals will be paid for government employees in three years.
The accumulative raise will reach 15 per cent in the third year, according to the decision.
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