Riyadh - Mubasher: The inflation rate in Saudi Arabia is expected to go up during the second half of the year following the expected revision in fuel and utility prices, according to a recent report by Al Rajhi Capital Research.

Consumption patterns remain weak on an annual basis though they have improved on a monthly basis, the report noted.

The aggregate banking sector profit surged 16% in January to reach SAR 4.35 billion, the highest monthly profit ever reported, as per the monthly data of the Saudi Arabian Monetary Agency (SAMA).

The Saudi economy also witnessed deflation for the first time in more than ten years in January 2017, owing to the continued fall in food prices and the high base effect of fuel and electricity prices in January 2016.

Consumer prices entered the deflation territory last January, as the Saudi consumer price index declined for the first time in more than a decade, primarily due to the food and beverages, and transport sectors.

Saudi Arabia’s foreign reserve assets declined in January at the slowest annual pace in 15 months, the report added.

The Saudi government is planning another round of international bond sale which may help in reducing further drawdown in foreign assets.

Saudi international bond yields with 5-year and 10-year maturities dropped on a monthly basis by 32.6 basis points (bps) and 17.1 bps in February to 2.604% and 3.589%, respectively.