The annual inflation rate in Saudi Arabia stabilized at 1.9 percent during September, while consumer prices did not record a change on a monthly basis, amid risks surrounding global trade movement and energy supplies as a result of tensions in sea lanes, and the resulting pressures on shipping costs and supply chains.
Data from the General Authority for Statistics, issued Thursday, showed an increase in the consumer price index by 1.9 percent on an annual basis, driven by an increase in the prices of housing, water, electricity, gas, and other types of fuel by 3.6 percent, food and beverages by 1.4 percent, and transportation by 2.3 percent. On the other hand, the index stabilized compared to August, with price movements varying between the components of the consumer basket.
Relative stability
Shura Council member Fadl bin Saad Al-Buainain told Asharq Al-Awsat that the consistency of the consumer price index in Saudi Arabia at 1.9 percent last September is a positive indicator that reflects a state of relative stability in price levels and enhances confidence in the ability of the Saudi economy to deal with economic variables efficiently and flexibly.
According to the Shura Council member, stabilizing inflation at moderate levels gives consumers greater clarity in managing their expenses, helps families plan their budgets, supports the stability of the business environment and enhances investor confidence in the local market.
Fadel Al-Buainain stated that the real importance of this cohesion does not lie in the stability of the number alone, but rather in its ability to maintain a balance between the continuity of economic growth and reducing the living pressures on citizens and residents.
The continuation of inflation at moderate levels reflects the importance of economic policies aimed at enhancing market efficiency and sustainable growth, in line with the objectives of “Vision 2030,” according to Al-Buainain, who pointed out that it remains necessary to monitor the movements of housing, food, and services prices, to ensure that general stability is reflected in purchasing power and quality of life in a tangible way.
Rental prices
In turn, Dr. Salem Baajja, Professor of Economics at King Abdulaziz University, explained that the performance reflects a discrepancy in the price movement between the components of the consumer basket, with housing continuing to lead the sectors contributing to inflation, in addition to the rise in the prices of food, beverages, and transportation, compared to the decline in the prices of some goods and services.
He continued his speech to Asharq Al-Awsat, saying that the inflation rate at 1.9 percent reflects a relatively limited annual increase in the consumer basket, but it does not eliminate the variation in pressures between sectors, and that the continued growth of rents at a pace higher than general inflation makes developments in the rental market a decisive factor in reading the cost of living.
Dr. Bajaja added that judging the inflation trend requires monitoring the coming months, to find out whether stability will continue or whether rising rents and other components will accelerate the index again.
Causes of inflation
According to the index issued by the census, the prices of the housing section, water, electricity, gas and other types of fuel increased by 3.6 percent, as a result of the increase in the prices of the actual rental group for housing by 3.5 percent, followed by the section of personal care, social protection, and other goods and services by 3.3 percent, driven by an increase in the prices of other personal effects by 11.9 percent, which was affected by the increase in the prices of the jewelry and watches section by 12.9 percent. It was followed by Leisure, Sports and Culture, with a 2.5 per cent increase, driven by a 4.5 per cent increase in holiday package prices.
On the other hand, the prices of the furniture, home appliances and regular home maintenance section decreased by 0.5 percent, and the clothing and shoes section decreased by 0.4 percent.
Monthly comparison
On a monthly basis, the consumer price index in September recorded stability compared to last August, and this is due to the varying changes in the prices of the following sections: housing, water, electricity, gas and other types of fuel increased by 0.1 percent, driven by an increase in the prices of the actual rental group for housing by 0.2 percent. Prices for the Food and Beverage Department also rose by 0.1 percent, Personal Care, Social Protection, and Other Goods and Services by 0.1 percent, and the Education Services Department by 1.2 percent.
In contrast, the prices of the transportation section decreased by 0.1 percent, restaurants and accommodation services by 0.5 percent, entertainment, sports and culture by 0.6 percent, and furniture, household appliances and regular home maintenance by 0.2 percent.
The Housing, Water, Electricity, Gas and Other Fuels Department is the main contributor to annual inflation, as it contributed by 0.7 percentage points, followed by Food and Beverages with a contribution of 0.3 percentage points, in addition to the Transport Department’s contribution of 0.3 percentage points, Personal Care, Social Protection, and Other Goods and Services by 0.2 percentage points, and other departments that contributed by 0.3 percentage points.
The International Monetary Fund intends to send a mission to Lebanon next November. To continue discussions on addressing the banking crisis and restoring debt sustainability, at a time when the issues of distributing financial losses and the state’s contribution to treatment still require further consensus, while the banking reform law, whose amendments were approved by the House of Representatives in August, faces review before the Constitutional Council after President Joseph Aoun appealed one of its articles.
Deputy Director of the Fund's Middle East and Central Asia Department, Tanos Arvanitis, said on Thursday that Fund officials held good discussions with the Lebanese authorities during the annual meetings of the International Monetary Fund and the World Bank in Bangkok, and agreed to continue talks during the coming weeks, with a delegation of Fund employees visiting Lebanon in November.
Following her meeting with Lebanese Prime Minister Nawaf Salam and Finance Minister Yassine Jaber in Washington in late September, the Director General of the International Monetary Fund, Kristalina Georgieva, announced the visit of a delegation from the International Monetary Fund to Lebanon to continue negotiations and push them towards an agreement. She welcomed the progress made by the government in the path of reforms, praising its efforts in managing public finances and preparing the budget, and the steps taken to reform the banking sector and enhance financial discipline, stressing the Fund’s readiness to continue working with the Lebanese authorities and build on what has been achieved.
Jaber had said, in statements in late September, that his country was seeking to reach a staff-level agreement with the International Monetary Fund, paving the way for the transition to an integrated financing program. He pointed out that the adoption of the banking sector reform and restructuring law constituted an important step in the path of reforms, but he stressed that reaching a comprehensive agreement remains linked to the approval of the financial gap law, which determines the mechanism for distributing losses resulting from the financial crisis.
Arvanitis explained that Lebanon is facing an unprecedented financial and economic crisis, while the country has been exposed to exceptional shocks in recent years. He said that the government that took office in February 2025 sought to accelerate its efforts to develop a strategy to address the crisis, and that the Fund conducted several rounds of discussions to help it formulate a program that will return the country to the path of recovery.
He added that the Fund's focus was primarily on the banking sector, specifically on addressing the banking crisis and rehabilitating the sector, in a way that restores people's confidence in depositing their savings in the banking system, and gives banks the ability to provide credit to the economy, which is extremely important for achieving growth and the country's recovery.
At the same time, the Fund focused on restoring debt sustainability, especially since Lebanon is defaulting on its foreign debts, indicating that there is an actual correlation between addressing the banking crisis and restoring debt sustainability.
Arvanitis explained that discussions related to the banking crisis focused on the Bank Remediation Law and the Financial Gap Law, which constitute a framework for moving forward in restructuring the banking system. He pointed out that one of the main axes was to ensure that the financial gap law was compatible with the framework for addressing banks’ conditions, and to apply it to all cases in an organized manner, instead of leaving solutions to random estimates.
He added that the Fund needs more clarity about the state’s contribution to addressing the crisis. Given its connection to the sustainability of debt, and the need for this contribution to remain within tolerable limits, enabling Lebanon to service its debts.
Arvanitis stressed the importance of respecting recognized international standards, including the hierarchy of financial claims; To ensure that depositors do not bear losses before creditors who have higher priority.
He said that these are all the issues that the Fund is discussing with the Lebanese authorities, stressing that the discussions with the Lebanese delegation during the annual meetings were very good, and that the two parties agreed to continue them during the coming weeks.
In this context, Finance Minister Yassin Jaber from Bangkok stressed that protecting the rights of depositors, especially small depositors, constitutes the cornerstone of all financial legislation being considered, most notably the draft law to address the financial gap and restructure the banking sector. Jaber stressed that financial discipline should pave the way for the adoption of fair legislation that restores confidence in the banking system and enhances its ability to support the economy, noting that the Lebanese delegation continues intensive coordination with the International Monetary Fund and the World Bank to secure emergency financing and support social protection networks and economic recovery, in a way that reduces the living burdens and pressures resulting from the displacement crisis and the current attacks in the south.
The Saudi company “Aqua” is working to develop projects in renewable energy, electricity storage, and water desalination, at a time when the expansion of artificial intelligence and data centers is raising the demand for electricity, and increasing the importance of the reliability of supplies, operating efficiency, and its cost.
The CEO of Aqua in Saudi Arabia, Omar Al-Hassan, told Asharq Al-Awsat that the rapid growth in artificial intelligence and data centers is changing the requirements of the energy sector, as the challenge is no longer limited to providing larger quantities of electricity, but also includes ensuring the continuity of supplies, their efficiency, and their competitive cost.
He added that the company is working to develop projects that combine renewable energy, storage and solutions that enhance the reliability of supplies, benefiting from its experience in large-scale energy and water projects. Its total electricity generation capacity is 98.2 gigawatts, while the capacity of its water desalination portfolio reaches 9.7 million cubic meters per day.
Al-Hassan pointed out that Aqua is also working to take advantage of digital technologies and artificial intelligence to improve the performance of its assets, going beyond meeting the growing demand for electricity to developing more efficient and reliable solutions.
Electricity storage supports the expansion of renewable energy
With the expansion of solar and wind energy projects in Saudi Arabia, the importance of storing electricity increases to take advantage of the energy produced in times of abundance and provide it when demand rises, according to Al-Hassan, who expected that storage will play a growing role in the energy system, alongside generation sources and transportation networks.
In this context, in August 2026, ACWA signed three agreements with the Saudi Energy Procurement Company, as the main buyer, to develop projects to store electricity with batteries in “Hudn,” “Al-Muwayh,” and “Al-Kahfah,” with a total capacity of 1,500 megawatts, and a storage capacity of up to 6,000 megawatt hours, under 15-year agreements.
Al-Hassan said that these projects reflect the opportunities available in the Saudi market, and the importance of storage in supporting the expansion of renewable energy, expecting storage to become a more important part of planning new projects, according to the needs of the network, the requirements of each project, and its economic feasibility.
The Red Sea project combines generation and storage
In the Red Sea project, which combines solar energy and battery storage, the most prominent results, according to Al-Hassan, are proving the possibility of operating an integrated facilities system that relies on renewable energy and storage without connecting to the national electrical grid.
The project reached commercial operation in September 2026, and includes a solar power plant with a capacity of 340 megawatts and a battery storage system with a capacity of 1,227 megawatt hours.
Al-Hassan explained that the project highlights the importance of integrated planning from the beginning, so that generation and storage capabilities are designed to meet actual demand and ensure continuity of supplies. He added that the success of renewable energy projects does not depend on the generation capacity alone, but also on the integration of the system’s components and the efficiency of its operation, taking into account the different site needs, costs, and operating requirements.
Partnerships to develop water desalination technologies
In the water sector, Aqua sees opportunities to develop desalination by expanding the use of renewable energy and adopting more efficient technologies, which contributes to reducing energy consumption and production costs and meeting increasing demand.
The capacity of the company's water desalination portfolio is 9.7 million cubic meters per day, according to Al-Hassan, who pointed out the company's focus on improving the efficiency of plants, developing desalination technologies, and benefiting from renewable energy to reduce dependence on traditional energy sources, wherever technical and economic conditions allow for this.
In August 2026, Aqua signed a memorandum of understanding with Veolia to cooperate in developing desalination plant designs and equipment and improving their operational performance. It also signed a joint development agreement with PT Garam in Indonesia to establish a project that combines seawater desalination and industrial salt production, allowing the project’s infrastructure to be utilized to meet water needs and support industrial activities.
According to Al-Hassan, growth opportunities in the sector include increasing water production, improving the efficiency of existing plants, developing new technologies, and expanding partnerships that help provide water reliably and at a competitive cost.
