Inflation in Saudi Arabia has fallen to 5.06 per cent in 2009, from 9.9 per cent in 2008 according to the Central Department of Statistics.

The latest figures show that inflation has fallen significantly since peaking in July 2008 at 11.1 per cent.

The rapid fall in average inflation for the year is despite the figures for December 2009 showing monthly of inflation of 4.2 per cent, driven by rent and housing services cost increases of 14 per cent.

The International Monetary Fund (IMF) forecasts that the Saudi economy will grow by 4 per cent in 2010. It is also forecasting inflation in the kingdom will average 4 per cent.

Inflation has dropped across the region as a result of the economic slowdown, and analysts expect price increases will remain subdued in 2010. The IMF is forecasting that the highest inflation rates in the Gulf in 2010 will be in Qatar and Saudi, both at 4 per cent.