Riyadh – Mubasher: Jadwa Investment has maintained its forecast for Saudi Arabia’s inflation rate for full-year 2020 at 3% and 3.2% for full-year 2021.  

The main risk to this forecast relates to a second wave of COVID-19 in the kingdom, which would likely affect consumption and prices negatively in the fourth quarter (Q4) or Q1 of the next year, according to a recent report.

Looking ahead into Q4, some sectors are still not predicted to hit full capacity until at least year-end. This includes the sectors of travel, hotels and restaurants as well as tourism and entertainment.

According to official September inflation data, prices rose by 5.7% year-on-year (YoY) and declined by 0.2% month-on-month (MoM).

Overall, prices rose by an average of 6% during Q3, compared to 0.9% in Q2, reflecting the impact of higher value-added tax (VAT) since July 2020.

Meanwhile, within the food and beverages segment, prices rose by a sizable 13.5% YoY in Q3, while transportation prices grew by an average of 7.7% YoY.

Moreover, although point of sale (POS) transactions slowed immediately after the implementation of VAT in July, some recovery in POS transactions was observed in and around Eid Al-Adha break.