Riyadh, Asharq Al-Awsat—Rising prices for goods imported into Saudi Arabia can be attributed to high inflation, according to economists based in the kingdom.
Speaking to Asharq Al-Awsat on Tuesday, a number of economic experts said rising employment in the Kingdom during 2013 had led to an increase in domestic demand fueled by residents having more disposable income. This in turn led to increasing domestic prices, and eventually, pushed up the already-high prices of imports once they entered the Saudi market.
Economic expert Faisal Al-Aqab told Asharq Al-Awsat that he expects the value of imports to continue to rise, but much less markedly than the 2012–2013 jump, citing the slowdown in inflation in the exporting countries themselves, which should in turn affect the Saudi market positively.
A press release published by the Saudi Arabian Customs Authority last week said there had been a 6.7 percent year-on-year rise in the total value of imports coming into the Kingdom, from 589 billion Saudi rials (157 billion US dollars) in 2012 to 628 billion rials (167.4 billion dollars) in 2013.
Total customs duties jumped 12 percent during the same period to 24.9 billion rials (6.6 billion dollars).
Aqab said there were a number of reasons for the rise in the price of imports coming into the Saudi market. “First among these reasons are the initial prices of the products themselves, but also contributing was the rise in domestic consumption rates due to rising employment,” he said.
A recent report by the Saudi Arabian Monetary Agency (SAMA) showed unemployment went down from 5.8 percent in 2011 to 5.5 percent in 2012. A total of 1.9 million people were working in the Saudi public sector by the end of 2012, a 9.2 percent increase on the 2011, with private sector employment in 2012 jumping 9.1 percent during the same period to 8.5 million people.
Saudi Arabia averaged a 3.6 percent inflation rate during the first 10 months of 2013, mainly on the back of higher food and housing costs, according to a National Bank of Kuwait report.
Jamil Al-Uthman, a sales and marketing specialist in the food sector, said prices had risen markedly for domestic food products. He told Asharq Al-Awsat: “This [rise in domestic food prices] had a big effect on the final retail prices of the imported products reaching the Saudi market.”
But the Food and Agriculture Organization of the United Nations said a number of food prices, including for pulses, sugar, oils and meat, had declined in January, leading to expectations that these prices will further decrease.
According to Saudi Arabia’s Central Department of Statistics and Information, the Kingdom’s annual inflation rate decreased to 2.4 percent in January 2014, from 3 percent in December 2013.