Saudi Arabia’s inflation rate surged to 6.1% in July on VAT hike

Dubai: Saudi Arabia’s inflation quickened at the fastest pace since at least 2012 after the kingdom tripled its value-added tax.

Consumer prices rose an annual 6.1% in July from 0.5% in June, data released by the General Authority for Statistics showed on Sunday.

The increase was driven mainly by an acceleration in the cost of food and beverages – which rose more than 14% compared with last year – and transport, which rose 7.3%. Reductions in fuel and gasoline prices offset the broader inflation pickup.

Saudi Arabia increased its value-added tax from 5% to 15% on July 1, part of the government’s measures to compensate for lower oil prices as the coronavirus pandemic and crude market turmoil cut deeply into state revenue.