The latest CPI release for Saudi Arabia, published on November 13, 2025, shows inflation steady at 2.20% year-over-year (YoY), unchanged from October and slightly above the 2.00% market estimate. This marks a rebound from the near-zero inflation readings recorded in August and September, reflecting a return to moderate price pressures after a summer lull. The data, sourced from the Sigmanomics database, highlights a resilient inflation environment amid ongoing global uncertainties.

Drivers this month

• Shelter and housing costs contributed approximately 0.18 percentage points (pp) to the CPI, consistent with seasonal trends.
• Food and beverage prices remained stable, with minor upward pressure from imported goods.
• Energy prices, influenced by global oil market volatility, had a neutral net effect after government subsidies cushioned domestic fuel costs.

Policy pulse

The 2.20% inflation rate sits comfortably within the Saudi Central Bank’s implicit target range of 2-3%, supporting a steady monetary policy stance. The Saudi Arabian Monetary Authority (SAMA) has maintained interest rates at 5.25% since mid-2025, balancing inflation control with growth support.

Market lens

Immediate reaction: The Saudi Riyal (SAR) remained stable against the US dollar post-release, while short-term government bond yields edged up 5 basis points, reflecting mild inflation concerns. Breakeven inflation swaps for 2-year horizons held steady near 2.10%, signaling market confidence in inflation stability.

Saudi Arabia’s CPI trend over the past 12 months reveals a pattern of subdued inflation, with an average rate of 1.10% from November 2024 to November 2025. The current 2.20% reading doubles this average, indicating a recent uptick but still within manageable bounds. Core macroeconomic indicators such as GDP growth, unemployment, and wage growth provide context for this inflation dynamic.

GDP and labor market

Saudi Arabia’s GDP growth accelerated to 3.50% annualized in Q3 2025, supported by higher oil revenues and non-oil sector expansion. Unemployment remains low at 5.30%, with wage growth steady at 3.00%, underpinning moderate consumer demand and price pressures.

Fiscal policy & government budget

The government’s fiscal position remains robust, with a budget surplus of 2.80% of GDP projected for 2025. Continued investment in Vision 2030 projects and infrastructure spending supports economic diversification without overheating the economy. Subsidy reforms have been gradual, limiting inflationary shocks.

External shocks & geopolitical risks

Global oil price volatility, driven by OPEC+ production decisions and geopolitical tensions in the Middle East, remains a key external risk. Recent escalations in regional conflicts could pressure energy prices upward, potentially feeding into domestic inflation. However, Saudi Arabia’s strategic reserves and policy buffers mitigate immediate risks.

Drivers this month

• Shelter costs contributed 0.18 pp, consistent with seasonal rent adjustments.
• Food prices were flat, reflecting stable import costs and domestic supply.
• Energy prices had a neutral impact due to government price controls.

Policy pulse

The inflation rate remains below the 3% upper threshold that would trigger tighter monetary policy. SAMA’s current stance of maintaining rates at 5.25% aligns with the data, suggesting no immediate rate hikes are necessary.

Market lens

Immediate reaction: The SAR/USD exchange rate held steady at 3.75 post-release. The 2-year government bond yield rose slightly from 3.10% to 3.15%, reflecting a mild adjustment to inflation expectations. Inflation-linked securities showed stable breakeven rates near 2.10%.

Looking ahead, Saudi Arabia’s inflation trajectory depends on several key factors. The base case scenario anticipates CPI remaining near 2.00-2.50% over the next 12 months, supported by stable energy prices and moderate wage growth. However, upside and downside risks remain.

Bullish scenario (20% probability)

• Oil prices stabilize around $80/barrel, supporting government revenues and consumer confidence.
• Global supply chains improve, reducing imported inflation pressures.
• Fiscal stimulus from Vision 2030 projects boosts economic growth without overheating.

Base scenario (60% probability)

• Inflation remains stable at 2.00-2.50%, with balanced monetary and fiscal policies.
• Geopolitical tensions cause mild volatility but no sustained shocks.
• Government subsidy reforms proceed gradually, limiting price shocks.

Bearish scenario (20% probability)

• Escalation in Middle East conflicts drives oil prices above $100/barrel, pushing inflation above 3.50%.
• Supply chain disruptions increase food and consumer goods prices sharply.
• Faster subsidy removal triggers domestic price spikes and inflation expectations rise.

Saudi Arabia’s November 2025 CPI reading confirms a stable inflation environment after a period of low volatility. The 2.20% YoY rate aligns with the central bank’s inflation target, supporting a steady monetary policy stance. Fiscal discipline and government buffers mitigate external shocks, though geopolitical risks and oil price volatility remain key uncertainties. Market reactions have been muted, reflecting confidence in policy frameworks. Going forward, inflation is expected to hover near target, with risks balanced between moderate upside from energy prices and downside from global supply improvements.

Key Markets Likely to React to CPI

The Saudi CPI influences several key markets, notably the Saudi Riyal (SARUSD), Tadawul All Share Index (TASI), Brent Crude Oil (BRENT), US Dollar Index (DXYUSD), and Bitcoin (BTCUSD). SARUSD is sensitive to inflation as it affects monetary policy and currency stability. TASI reacts to inflation through corporate earnings and consumer demand. Brent Crude impacts inflation directly via energy costs. DXYUSD reflects global risk sentiment, while BTCUSD often moves inversely to inflation expectations as a speculative hedge.

Indicator vs. SARUSD Since 2020

FAQ

What does the latest Saudi CPI reading indicate?

The 2.20% YoY inflation rate signals stable price growth within the central bank’s target range, supporting steady monetary policy.

How does Saudi inflation affect monetary policy?

Inflation near 2-3% allows the Saudi Central Bank to maintain current interest rates, balancing growth and price stability.

What are the main risks to Saudi inflation going forward?

Key risks include oil price shocks from geopolitical tensions and potential supply chain disruptions impacting food and consumer goods prices.

Key takeaway: Saudi Arabia’s inflation remains stable and well-managed, supporting a balanced policy outlook amid external uncertainties.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.