Riyadh: With inflation rising across the Gulf Arab region, Saudi Arabia's perennial problem of unequal distribution of wealth has never been so obvious.

While poor Saudis queue for hours to obtain water in the kingdom's second city Jeddah, others are able to take advantage of America's new-found disdain for gas-guzzling four-wheel-drives by snapping up imported cars.

Thousands of couples are cutting costs by forgoing individual weddings in favour of mass ceremonies carried out by a charity backed by Saudi princes. But the affluent are still going on holidays, albeit opting for cheaper stays in neighbouring Arab countries rather than trips to Europe or Asia.

Surging oil prices have triggered a turnaround in Saudi Arabia's economic fortunes and a return to some of the big spending - by wealthy individuals and the monarchy - that characterised the 1970s and 1980s.

But the economic boom has also stoked prices for food and fuel, leading to discontent in a rapidly changing country where around two-thirds of the 17 million-strong local population are under 30, educated and outspoken and aware of events abroad.

In June, inflation in the world's top oil exporter hit a 30-year high of 10.6 per cent, mainly on increases in food and housing costs.

"It hasn't reached the point that it's barred us from travelling. We will still travel like we used to and maintain the same lifestyle," said Ohoud, a bank manager.

However, she said she had noticed that salaries were not keeping pace with prices.

John Sfakianakis, chief economist at SABB bank, HSBC's Saudi subsidiary, said the government could not raise wages to match inflation if it wanted to avoid adding inflationary pressures, but it risked angering workers.

"Public sector workers don't understand why the government is not raising wages to match inflation; there is a disconnection between expectations and what the government delivers and so there is discontent," he said.

A January wage hike of five per cent for government employees disappointed those Saudis who earn less than 10,000 riyals ($2,666) a month, especially after Gulf neighbours moved more quickly to raise wages by larger amounts.

Saudis earning less than that figure would still expect to employ a driver and at least one maid. They are not taxed and receive free health and education.

"I don't feel it has affected me too much because my family's financial situation is good," said Najla, 22, a bank intern in Riyadh.

"But I've noticed we don't buy as many things as we used to, like laptops. In every home, each person has to buy at least one a year, that's the usual demand. But not for us this year."

At the other end of the spectrum is Lulwah, 36, a mother-of-five who sells snacks on a mat at a park in Riyadh. She had to take out a loan from a charity.

The question of how many people live in poverty remains taboo in a kingdom fabled for its tremendous wealth. But half the population rents its home, and 10 billion riyals has been set aside for low-cost housing.

A Saudi economist, who has worked with the government, said there should be more transparency to allow Saudis to understand how the state allocated revenue from oil.

"Nobody knows how much the government takes in from oil," said the economist, speaking on condition of anonymity.

"We know how much is in the budget, but not how much (state oil firm) Aramco got in the first place. The budget figure is a cheque Aramco gave to the government," he said. "You can make some calculations; there is a 20-22 per cent difference."

"We are passing through a very critical stage. You are talking about a state with more than a billion dollars every 24 hours. They can buy anyone," said a liberal reformer who was detained in 2004 and who also requested anonymity.