Saudi Arabia is facing inflation at a level not seen since the 1970’s oil boom. Nearing 10%, inflation is hitting all Saudis, and of course it is the poor and middle class who feel it most strongly. In an effort to reduce inflationary pressures, the government is curbing its own spending while both raising salaries and subsidies on basic food stuffs. How it can control the rising cost of housing is another matter.

Both Financial Times and Saudi Gazette run articles on the issue. Whether the government’s mega-projects—like the various ‘Economic Cities’ or King Abdullah University for Science & Technology—will be affected is not reported.

Call to Saudis to curb spending
Roula Khalaf

Saudi Arabia’s central bank governor on Tuesday called on the government to fight inflation by curbing public expenditure, warning that economic policies in the kingdom faced “a critical situation”.

The call by Hamad al-Sayari followed a government announcement that it would invest in agricultural and livestock projects in foreign countries to ensure food security and control commodity prices.

Saudi Arabia’s oil-fuelled boom is producing massive investment in infrastructure projects but is also leading to growing social pressure as inflation spirals, reaching 9.6 per cent in March year on year. Although lower than in Qatar and the United Arab Emirates, the inflation rate is tormenting a country accustomed to near zero inflation.
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Saudi Gazette:

Public spending cuts effective, says Assaf
Shahid Ali Khan Saudi Gazette

RIYADH – Steps to curb public spending in the Kingdom have so far paid much dividends and the government is striving more in this regard, Saudi Finance Minister Ibrahim Al-Assaf told reporters on the sidelines of the Euromoney conference in Riyadh, Tuesday.

“We are succeeding in reducing public spending in some areas,” Assaf said, without elaborating.
The economic policies in the Kingdom faced a critical situation at a time when development ambitions in the country sought to enhance the fundamentals of economy by adopting expansionary financial policies, said Dr. Hamad Al-Sayari, Governor of Saudi Arabian Monetary Agency (SAMA). Inflation in the Kingdom hit 9.6 percent in March, the highest since at least the oil boom of the 1970s, as rents surged 19 percent and food prices jumped 14.2 percent.

The largest Arab economy has been pouring windfall oil revenues from a six-fold rise in oil prices since 2002 into developing infrastructure, to diversify its economy away from oil and create jobs.
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Also related is this Financial Times piece: Mideast reels as hunger outgrows oil earnings