Inflation worries

September 18, 2022

By Youssef Bin Trad Al-Saadoun

Inflation continues to remain on top of the list of issues of global concern over the past 13 months. In fact, the level of concern about it increased during this year, featuring a significant jump. Inflation was followed in order by other issues of concern: poverty and social injustice, unemployment, crime and violence, financial and political corruption, health care, and taxes.

The monthly survey, titled ‘What Worries the World,’ released by Ipsos International, explores what the public thinks are the most important social and political issues across 28 countries in various continents of the world, including Saudi Arabia.

The survey showed that two out of three people believe that the economic situation is bad in their countries and that their countries are going in the wrong direction.

The ‘Global Inflation Monitoring’ survey, released by Ipsos in July, also showed the concern of the people of the world about the continued rise in inflation and the high cost of living as seven out of 10 people expect the costs of food, services, and household necessities would continue to register an increase over the next six months.

They attributed the main reasons that led to the price rise to the global economic situation, the Russian-Ukrainian war, and then the policies adopted by the governments of their countries.

Across 28 countries, one-third of people say the current economic situation in their country is good while two-thirds say it’s bad. Saudi Arabia tops the table with 97 percent describing the country’s economic situation as good. This is Saudi Arabia’s joint-highest score.

Saudis were also the people least concerned about poverty and social injustice, and among the four people least concerned about crime and violence.

But it is interesting to note that among the 16 countries that witnessed a noticeable increase in the rates of people’s concern about inflation, Saudis were the highest with an increase of 24 degrees.

This concern of the Saudis is clearly evident in the “Visions of Inflation in Saudi Arabia” survey report, which was released by Ipsos last June.

The report cited that the most important issues that worry Saudis now are inflation, taxes, unemployment, and the coronavirus pandemic. Most of those surveyed reported that prices had risen over the past 12 months.

Women were more concerned than men about inflation, taxes, and fees while they were the least concerned about unemployment. As far as those who have lower incomes are concerned, they have more complaints about the levels of taxes, fees, and unemployment.

The majority of those surveyed also spoke about their suffering due to the rise in prices of food and beverages, transportation, entertainment, restaurants, services such as electricity and water, travel expenses, housing requirements, healthcare, and communications.

Saudis attributed the main reasons for the price hike to global wars and conflicts, the spread of the coronavirus pandemic, taxes, price hikes made by manufacturers and traders, and high shipping costs.

Undoubtedly, the wise Saudi leadership and the government are not oblivious to these issues, based on their usual care and concern for the well being of the Saudi people and their protection from the repercussions of international economic developments.

The best evidence for this is a royal order issued last July that was based on the recommendation of Crown Prince Mohammed Bin Salman, deputy premier, minister of defense, and chairman of the Council of Economic and Development Affairs, approving the allocation of financial support amounting to SR20 billion to tackle the repercussions of the global price rise.

Certainly, there will be continuous benevolent efforts from the part of the government to study the causes of issues of concern to the Saudi people and to deal with them with all seriousness so as to confront such fallouts and find ideal solutions to these issues.

Taking into account of the current robust growth and vibrant activities being witnessed in the national economy, it could be appropriate to consider the following matters: 1- Reviewing the rates of government fees and customs fees. 2- Reducing the rates of value-added tax (VAT), which contribute to increasing the purchasing power of consumers. 3- Evaluating the feasibility of setting new ceilings for the prices of some essential commodities, services, and real estate.

4- Enhancing local production by striving to reduce production costs of goods, services, and fees so as to enable investors to increase their production capacities. 5- Encouraging the spread of consumer associations. 6- Intensifying efforts to monitor price manipulations and commercial fraud. 7- Avoiding monopolistic practices of concessionaires, commercial agencies, and distributors, and create a greater ground for competition among traders of goods and services.

8- Ensure the complete independence of the Saudi Central Bank (SAMA) from the Ministry of Finance. 9- Reviewing the fixed exchange rate system for riyal with the US dollar, and evaluating the feasibility of linking it to a basket of currencies for the Kingdom’s largest trading partners, in order to ensure better stability of its purchasing value, and expand the capabilities of SAMA in adopting appropriate monetary policies.

10- Studying the impact on the standard of living due to a surge in internal migration from the suburbs and villages to the main cities in search of jobs and services as a result of the concentration of investment projects in urban areas. 11- Lack of confidence in the guidance and proposals of the International Monetary Fund and the International Bank for Reconstruction and Development.

September 18, 2022
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