Saudi prices stable but war to nudge inflation higher

• March inflation 1.8% versus February’s 1.7%
• Fuel subsidies insulate Saudis from pricey oil
• ADCB: Saudi price hikes below world average

Saudi inflation remained stable in March despite rises in global prices due to the Iran war, but economists say cost-of-living pressure is likely to creep up in the coming months.

Consumers in the kingdom should stay shielded from the biggest impacts of the Gulf conflict, according to forecasters.

The monthly consumer-price index released by the General Authority for Statistics on Wednesday showed an annual increase of 1.8 percent, a slight uptick from February’s 1.7 percent but below the 2 percent average of 2025.

The rise in March mostly stemmed from increased costs for housing, water, electricity, gas and other fuels. Rental prices added 4.8 percent, a slowdown from February’s 5.1 percent.

“There’s no meaningful sign of the impact of the crisis on Saudi inflation so far,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB).

She cited the deceleration in rental inflation, a driver of Saudi price rises in recent years, as one reason for the stable outcome overall. 

Saudi consumers also benefit from fuel subsidies, which insulate them from high oil prices, Malik noted. 

Pricier fuel has been a major contributor to inflation around the world. The International Monetary Fund forecasts a 19 percent rise in energy costs globally this year, leading to higher commodity prices.

On Tuesday IMF chief economist Pierre-Olivier Gourinchas said the Fund projected global inflation of between 4.4 percent and 6 percent in 2026.

Further reading:

• IMF forecasts severe hit to Middle East growth from Iran war
• Kuwait’s fiscal safety net will shield it from worst of Iran war
• The Gulf’s growth model faces its first true stress test

ADCB expects prices in Saudi Arabia to rise at a lower rate than the global average in 2026. It has increased its inflation forecast for the kingdom to 2.3 percent this year from its previous projection of 1.8 percent.

“We expect more of the inflationary pressures to become visible in the next few months,” Malik said, “but overall we expect inflation will be contained.”

Oil-importing countries will be among the worst affected, she said.

On Tuesday the Central Bank of Egypt announced an increase in domestic inflation from 12.7 percent in February to 14 percent in March.