Saudi Inflation Set to Stay Low Through 2027

Saudi inflation is expected to remain low and stable through 2027, Consumer prices in the Kingdom rose 1.8% year-on-year in August 2026, continuing a run of modest, well-contained increases.

Central bank figures showed inflation at 1.8% year-on-year in the first quarter of 2026, with prices climbing just 0.4% quarter-on-quarter. Forecasts for the Kingdom's average inflation in 2026 range from 1.8% to 2.5%, while projections for 2027 sit in a narrow band of 1.8% to 2.1%.

Several structural factors are keeping price pressures in check. The Saudi Riyal's peg to the US dollar limits imported inflation, while regulated fuel and electricity prices, food subsidies and price caps, and rent controls all help stabilise the cost of living.

Housing remains the main driver

Rents continue to be the largest contributor to inflation, though the pace of growth has eased. Housing rents rose 4.3% year-on-year in July 2026, down from 5.2% in January 2026.

For residents and expats across Riyadh, Jeddah, Dammam and beyond, contained inflation means household budgets face less strain on everyday essentials. A steady price environment also supports business planning and consumer confidence, reinforcing the broader stability the Kingdom has sought to maintain during a period of rapid economic development.

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