Tuesday, April 17, 2007

Inflation in Saudi Arabia / Brad Setzer

after questioning the us quality of measuring cpi i think was to harsh... (click labels)

here comes saudi arabia!

thanks to brad setser and his excellent blog. http://www.rgemonitor.com/blog/setser/

nachdem ich ja in der vergangenheit die eigenarten der us erhebung des cpi kritisiert habe relativiert sich die kritik wenn man sieht wie kreativ saudi arabien vorgeht.

empfehle zudem den link und den blog von brad setser.

The details reported in the Sfakianakis paper left me more convinced that the Saudi data – which shows a 3.5% y/y increase in prices – understates actual inflation. Some tidbits:

  • The price of a schawarma sandwich is up 30% in the last 18 months.

  • Fresh fruit prices are up between 50 and 80% (y/y), and vegetable prices are up 20-40%, according to an informal survey. It seems that higher paying construction jobs are pulling imported labor out of agriculture (cement factories are at 100% of capacity).

  • Beef prices are up 15%, Fish prices are up 20-35% (all y/y).

  • Rents in Riyadh are up 20-25% y/y

  • Wages for high-end construction jobs are up 50% -- and Saudi contractors are complaining of a shortage of imported labor at the low-end.
All in all, that doesn’t sound to me like an economy with 3.5% inflation, even if the price of a telephone call is falling. A cut in fuel prices (yes, a cut -- nothing like sitting on a big pool of oil) in 2006 did help hold down 2006 inflation, but no further cuts are expected in 2007 ...

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