Saudi Arabia has so far managed to shield its consumer packaged goods (CPG) sector from the worst of the inflationary shock triggered by the Middle East war, even as food, fuel and logistics costs climbed across the Gulf region.
The Kingdom’s Consumer Price Index (CPI) rose 1.7 percent year on year in April, according to Kamco Invest’s May 2026 Gulf Cooperation Council inflation update, keeping Saudi inflation “slightly below the 2 percent mark” during the first several months of the year.
The relatively moderate rise has helped stabilize pricing pressures across Saudi Arabia’s retail and consumer goods markets, particularly compared to sharper food and transport inflation seen elsewhere in the GCC.
Saudi Arabia’s food and beverage prices increased just 0.6 percent year on year in April, despite growing regional concerns over rising import costs and supply-chain disruptions linked to the conflict. The increase was led by a 1.8 percent rise in fresh, chilled or frozen meat prices.
On a monthly basis, food and beverage prices rose 0.8 percent in April, driven by a 0.9 percent increase in the broader food group.
Kamco Invest said GCC inflationary effects are “present but generally moderate” under a reference scenario that assumes disruptions fade by mid-2026. However, the report warned that Gulf economies remain vulnerable because food imports account for more than 80 percent of consumption in four GCC countries.
The report added that prolonged disruptions could affect inventories and push up food prices further, posing risks for supermarkets, retailers and CPG manufacturers dependent on imported raw materials and finished goods.
Saudi Arabia’s overall inflation was mainly driven by housing-related costs rather than broad-based consumer goods inflation. Housing, water, electricity, gas and other fuel prices increased 3.8 percent year on year in April, supported by a 4.8 percent rise in actual housing rents.
Transport prices rose 1 percent, driven by a 5.2 percent increase in passenger transport services, while restaurant and accommodation services increased 1 percent.
The wider inflation outlook has darkened globally since the outbreak of the Middle East war in February. Kamco Invest noted that the conflict had reversed part of the global disinflation trend seen over the past two years, while the International Monetary Fund revised global headline inflation upward to 4.4 percent for 2026.
The World Bank also warned in its latest Commodity Markets Outlook that the conflict could trigger the sharpest energy-price surge in four years. It expects energy prices to rise 24 percent in 2026 and overall commodity prices to increase 16 percent due to higher energy, fertilizer and metals prices.
Across the GCC, inflation trends have diverged sharply. Kuwait recorded a 6.3 percent rise in food and beverage prices in April, while Qatar saw food and beverage inflation jump 10.4 percent year on year. Oman posted the region’s highest inflation rate at 3.2 percent, with vegetables prices surging 25 percent.
In the UAE, fuel costs rose sharply as diesel prices jumped more than 70 percent month on month in April, while petrol prices increased more than 30 percent, according to Kamco Invest.
The IMF said upward inflation revisions among GCC economies and Iraq ranged from about 0.5 percentage points in Saudi Arabia to about 1.5 percentage points in Bahrain, “mainly because of higher trading costs.”
The fund also noted that Saudi Arabia remains less sensitive than Kuwait to oil-price and export-volume swings, helping cushion the broader economy from external shocks.
Kamco Invest warned that in a more adverse scenario, oil prices could climb to $110 per barrel, pushing global inflation to 5.4 percent in 2026. Under a more severe disruption scenario, global headline inflation could rise to above 6 percent by 2027.
The inflation outlook has also complicated expectations for interest-rate cuts. The US Federal Reserve kept its benchmark rate unchanged at 3.5 percent to 3.75 percent in April, while GCC central banks continued to mirror Fed policy by keeping rates steady.
