Saudi Inflation Steady at 1.8% as Economy Grows

Recent economic reports reviewed by the Council of Economic and Development Affairs show that annual inflation in the Kingdom held at 1.8% in July 2026 — among the lowest rates worldwide — while the economy continued to expand across both oil and non-oil activities.

headline inflation has remained stable at 1.8% for at least three consecutive months from May to July 2026, with monthly Consumer Price Index increases of around 0.2%. The rise in prices was driven mainly by the housing, water, electricity, gas and other fuels category, which recorded about 4.2% annual inflation in mid-2026.

On growth, real GDP expanded by roughly 3% year-on-year in the first quarter of 2026, supported by oil and non-oil activities as well as government services. Non-oil activities grew by about 2.9% over the same period, reflecting continued momentum in the domestic economy.

The non-oil private sector remained firmly in expansion territory, with the Purchasing Managers' Index around 53.1 points for four consecutive months up to July 2026. The Industrial Production Index rose 4.3% in June 2026 compared with the previous month, with mining and quarrying up 5.0% and manufacturing up 1.1%.

Why it matters

For residents and business owners in Riyadh, Jeddah and beyond, contained inflation means everyday prices are rising only modestly, even amid regional tensions and global energy shifts. Projections for 2026 point to real GDP growth of around 4.6% and inflation stabilizing near 2.0%, with the non-oil private sector identified as a key driver of future growth and job creation.

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