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Saudi- People expect low oil prices will bring relief
(MENAFN- Arab News) Saudis and expats are eagerly waiting for the low oil prices to reflect on the living costs in the Kingdom.
The recent price drop will plummet general prices in the Kingdom by more than 15 percent according to experts and analysts.
Several vital sectors in the Kingdom will be affected by the low oil prices as result of the scarcity of the demand and the production costs. However the Saudi market needs time to respond and interact with global changes in prices.
'The new oil prices will lead to a shrinkage of the production costs of commodities while the Saudi government will not increase its expenses on medium or long-term projects. Therefore several local sectors will be directly affected by these developments' Dr. Fadal Abu Al-Ainain an economy expert told Arab News.
'Many local businessmen will be forced to respond by cutting down their services and commodities' prices. Moreover the construction sector will be one of the segments that will be affected by the oil prices due to low construction materials' he added.
'The same thing will happen with food products they will be reduced by more than 10 percent as result of the low production and transportation cost. However the low oil prices need a time to be reflected in the local market' he added.
Meanwhile prominent rice importers had predicted that rice prices in the Kingdom are expected to go down by 5 to 10 percent in the coming months according to a report by local media. This means a great relief for consumers as Saudi inflation edged up in 2013 averaging 3.6 percent in the first 10 months mainly driven by higher food and housing costs. While food price inflation remained contained pressure from residential rents could rise amid a shortage in affordable housing a challenge that the government is trying to address through a construction program and new mortgage laws the report noted.
'The low oil prices will reduce the cash among costumers in the local market and this reason will play a big role to force businessmen to reduce prices to continue in the market. High oil prices from 2010 to 2014 were the main reason to raise the inflation rate across all sectors in the Kingdom' said Abu Al-Ainain.
The recent price drop will plummet general prices in the Kingdom by more than 15 percent according to experts and analysts.
Several vital sectors in the Kingdom will be affected by the low oil prices as result of the scarcity of the demand and the production costs. However the Saudi market needs time to respond and interact with global changes in prices.
'The new oil prices will lead to a shrinkage of the production costs of commodities while the Saudi government will not increase its expenses on medium or long-term projects. Therefore several local sectors will be directly affected by these developments' Dr. Fadal Abu Al-Ainain an economy expert told Arab News.
'Many local businessmen will be forced to respond by cutting down their services and commodities' prices. Moreover the construction sector will be one of the segments that will be affected by the oil prices due to low construction materials' he added.
'The same thing will happen with food products they will be reduced by more than 10 percent as result of the low production and transportation cost. However the low oil prices need a time to be reflected in the local market' he added.
Meanwhile prominent rice importers had predicted that rice prices in the Kingdom are expected to go down by 5 to 10 percent in the coming months according to a report by local media. This means a great relief for consumers as Saudi inflation edged up in 2013 averaging 3.6 percent in the first 10 months mainly driven by higher food and housing costs. While food price inflation remained contained pressure from residential rents could rise amid a shortage in affordable housing a challenge that the government is trying to address through a construction program and new mortgage laws the report noted.
'The low oil prices will reduce the cash among costumers in the local market and this reason will play a big role to force businessmen to reduce prices to continue in the market. High oil prices from 2010 to 2014 were the main reason to raise the inflation rate across all sectors in the Kingdom' said Abu Al-Ainain.
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