Inflation report (June 2013): CPI at 3.5 percent and no signs of cost-push

The Central Department of Statistics and Information released Consumer Price Index inflation data for June, showing inflation at 3.5 percent in June compared with 3.8 percent in May, pushed down by falling core inflation and food prices while rent and housing-related services component remained flat. Our estimate of Saudi core inflation, which excludes food and rental and housing-related services, maintained its downward trend for the fourth consecutive month to record 2.2 percent year-on-year. Food inflation is expected to increase further in July owing to a seasonal trend while strong housing demand will keep the upside risk to rental inflation.