RIYADH (Reuters) -Inflation in Saudi Arabia accelerated to 2.3% in June compared to the same month last year and was also up slightly from 2.2% in May, government data showed on Tuesday.
Inflation has hovered between 2% and 2.3% since the beginning of this year, mainly driven by rises in housing rents. It stood at 1.5% in June last year.
Rents for housing increased by 7.6% due to villa prices rising by 7.1%, the General Authority for Statistics said.
Housing was the primary reason for prices in the combined housing, water, electricity, gas and other fuels category climbing to 6.5%.
The Saudi government last month announced steps to balance Riyadh’s real estate market, including setting aside some price-capped plots for Saudi citizens.
Saudi Arabia also recently approved a new Real Estate Ownership and Investment Law, which will ease property purchases by foreigners when it takes effect next year.
Saudi Arabia is in the process of building several massive new developments around Riyadh as part of its Vision 2030 program of diversifying the economy away from oil and boosting both tourism and the private sector.
The new law is expected to balance out supply and demand in the long term, but is dependent on the success of the city’s real estate projects getting completed on schedule.
The International Monetary Fund expects Saudi inflation to remain steady at around 2%, supported by the riyal’s peg to the U.S. dollar, domestic subsidies and “an elastic supply of expatriate labor”.
(Reporting by Pesha MagidEditing by Gareth Jones)
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