Inflation & Purchasing Power Calculator
Calculate the impact of inflation on the Saudi Riyal based on official CPI data
Calculate Inflation Impact
Basic Goods Price Comparison in Saudi Arabia
How prices of some basic goods and services have changed in Saudi Arabia in recent years (approximate prices):
| Item | Price in 2015 | Price in 2026 | Change % |
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What Is Inflation and How Does It Affect Your Daily Life?
Inflation is an economic phenomenon characterized by a sustained and general rise in the level of prices over a specific period of time. This means that a unit of currency - in our case the Saudi Riyal (SAR) - loses part of its purchasing power over time. What you could buy for 100 SAR ten years ago now requires a significantly larger amount. Inflation is typically measured through the Consumer Price Index (CPI), which tracks changes in the prices of a basket of basic consumer goods and services.
Inflation affects your daily life in multiple ways that you may not notice directly. When prices of food, fuel, rent, healthcare, and education gradually rise, your standard of living declines if your income does not increase by a similar rate. Inflation also directly impacts the value of your bank savings - if the return rate on your savings account is lower than the inflation rate, you are actually losing money in real terms every day. This is why understanding inflation and monitoring its rates is critically important for anyone seeking to preserve and grow their wealth.
This inflation calculator helps you understand the actual impact of inflation on your money. By entering a specific amount and defining the time period, you can see how the purchasing power of your money has changed over the years. The calculator uses official inflation data published by the General Authority for Statistics in the Kingdom of Saudi Arabia, providing accurate and reliable results you can depend on for your financial planning. Whether you want to know the value of your money in the past or project its future value, you will find in this tool everything you need to make data-driven financial decisions.
Inflation in the Saudi Economy: A Comprehensive Overview
The Saudi economy has unique characteristics that make its inflation dynamics different from many other economies. First, the Saudi Riyal is pegged to the US Dollar at a fixed exchange rate (3.75 SAR per USD), which means the monetary policy of the Saudi Central Bank (SAMA) is significantly influenced by the US Federal Reserve's policies. This peg provides exchange rate stability but limits the flexibility of monetary policy in addressing domestic inflation.
Second, the Saudi government plays a pivotal role in controlling prices of many basic goods and services through government subsidies. Historically, fuel, electricity, and water prices have been heavily subsidized, keeping inflation rates relatively low. However, as part of Vision 2030, the Kingdom has undergone structural reforms including subsidy reductions and the introduction of VAT at 5% in 2018, later raised to 15% in 2020, leading to notable increases in inflation rates during those periods.
Saudi inflation has also been affected by global factors such as the COVID-19 pandemic, oil price fluctuations, and global supply chain disruptions. Despite these challenges, the Kingdom has successfully maintained moderate inflation rates compared to the global average, ranging between -2.1% and 3.4% during the period from 2015 to 2026. This relative stability reflects the strength and effectiveness of Saudi economic policies in managing inflationary pressures while advancing economic reform and diversification under Vision 2030.
Strategies to Protect Wealth from Inflation in Saudi Arabia
Protecting your savings and wealth from inflation erosion requires a well-thought-out and diversified investment strategy. The first and most important step is to avoid leaving large amounts in checking accounts that earn no return, because every passing day causes this money to lose part of its real value. Instead, investments should be distributed across multiple asset classes to achieve a balance between returns and risk.
Among the most prominent investment options available in Saudi Arabia: investing in the Saudi stock market (Tadawul), which has achieved historical returns that significantly exceed inflation rates; Real Estate Investment Traded Funds (REITs) that provide regular rental income; and government sukuk that offer guaranteed returns with low risk. Gold is also a traditional safe haven against inflation, as its value tends to rise during periods of high inflation. Additionally, direct real estate investment in major cities such as Riyadh, Jeddah, and Dammam represents an excellent option for long-term wealth protection.
It is also important to consider the concept of "real return" when evaluating any investment. The real return is the nominal return minus the inflation rate. If a savings account offers a 1.5% return while inflation is 2%, the real return is -0.5%, meaning you are actually losing purchasing power. Therefore, you should always aim to achieve a positive real return that exceeds the inflation rate. Use this inflation calculator regularly to monitor the impact of inflation on your savings and make investment decisions based on a clear understanding of the economic situation.
Understanding the Consumer Price Index and Using the Inflation Calculator
The Consumer Price Index (CPI) is the most widely used measure of inflation worldwide, and the General Authority for Statistics in Saudi Arabia publishes it monthly. The index is based on tracking changes in the prices of a weighted basket of goods and services regularly consumed by Saudi households. This basket includes multiple categories with different weights: food and beverages (approximately 18%), housing and utilities (approximately 25%), transportation (approximately 14%), and other categories such as clothing, education, health, communications, and entertainment.
The inflation calculator provided here uses actual annual inflation data for Saudi Arabia, making it a valuable tool for personal financial planning. You can use it for several practical purposes: calculating the current purchasing power of an old amount to know its equivalent today, planning for retirement by projecting the future value of your savings after accounting for inflation, comparing salaries across different years to determine whether your purchasing power has actually increased or decreased, and evaluating investment performance by determining whether returns exceed the inflation rate.
An important point to consider is that official inflation measured by the CPI may not accurately reflect your personal experience, because spending patterns vary from person to person. If a large proportion of your income goes to rent, for example, and rents have risen at a rate higher than the general average, your personal inflation will be higher than the official figure. This is why we have provided the option to enter a custom inflation rate in the calculator, allowing you to get results closer to your actual financial situation. We recommend regularly reviewing the General Authority for Statistics reports to follow the latest inflation data in the Kingdom and make informed financial decisions.