Saudi Consumer Prices (Sep.)

Saudi inflation dropped back to 5.7% y/y in September as food inflation eased and schools slashed tuition fees ahead of the new academic year. While the effects of July’s VAT hike will keep inflation elevated until the middle of next year, weak domestic demand is likely to dampen underlying price pressures.
Jason Tuvey Senior Emerging Markets Economist
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Middle East Economics Weekly

Egypt and UAE inflation, OPEC+, austerity in Algeria

Inflation figures for Egypt showed the headline rate jumped to a 20-month high in September and we think that this will delay a turn towards interest rate cuts. Elsewhere, the UAE emerged from deflation in August amid signs that the property sector has turned a corner. But disappointing news on the number of visitors to the World Expo reinforce our bearish view on the sector. Meanwhile, the rally in oil prices has ratcheted up the pressure on the OPEC+ to raise output quotas, which would most likely involve higher quotas for the Gulf. Finally, Algeria’s turn to fiscal austerity is unlikely to be enough to prevent a sharp devaluation in the coming years.

14 October 2021

Middle East Data Response

Saudi Arabia Consumer Prices (Sep.)

Saudi inflation rose to 0.6% y/y in September and is likely to drift a little higher over the rest of this year. However, we do not envisage a significant pick up in the headline rate and inflation is likely to remain around 1.0-1.5% y/y in 2022-23.

14 October 2021

Middle East Economics Weekly

OPEC+ fallout, Oman’s upgrade, TUI cancellations

The OPEC+ meeting this week triggered a rise in oil prices and, while we expect prices to fall by next year, rising production means that overall oil export revenues for the Gulf economies should increase in 2022. In turn, that will open the window for some governments to loosen fiscal policy. The exceptions to this are Oman and Bahrain. Although Oman had its outlook upgraded by S&P this week, both governments will still need to tighten fiscal policy further. Finally, the decision by travel company TUI to cancelled flights to Tunisia and Egypt until later this month highlights that recoveries in the tourism-dependent economies will be bumpy.

7 October 2021

More from Jason Tuvey

Emerging Europe Economics Update

Turkey’s inflation risks mount, CBRT to delay rate cuts

Turkish inflation hit a two-year high in June and recent domestic energy price hikes will cause it to rise even further over the next couple of months. High inflation and signs of a quick recovery from May’s lockdown mean that the central bank will probably delay the start of its easing cycle until later this year. We now expect the one-week repo rate to be lowered to 17.00% by end-2021 (previously 14.00%).

7 July 2021

Emerging Europe Data Response

Turkey Consumer Prices (Jun.)

The fresh rise in Turkey’s headline inflation rate to 17.5% y/y in June, coupled with signs of a strong rebound in activity after May’s three-week lockdown, means that an interest rate cut in the next couple of months is increasingly unlikely. An easing cycle is now more likely to commence later this year when inflation looks set to fall sharply.

5 July 2021

Emerging Europe Economics Weekly

Turkey dollarisation, Ukraine-IMF, Russia & Poland rates

Turkey’s central bank took steps this week to tackle deposit dollarisation in the banking sector, although these efforts will fail to make headway in the absence of a stronger commitment to rein in high inflation. Meanwhile, Ukraine’s government still has work to do to secure the next tranche of its IMF loan, but the economy can muddle through without help from the Fund for some time. Finally, other developments this week suggest that Poland’s central bank may stick to its recent dovish rhetoric while Russia looks like it could accelerate the pace of monetary tightening.

2 July 2021
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