There are positives and negatives in any economy. While inflation reflects a rise in prices, there is a high demand for goods – which has led to the increase in prices. This means an economic boom. This is the case with the prices of steel, cement and building materials. This is attributable to brisk activity in the construction sector, including development in the education, health, and road sectors. The inflation rate recorded in January this year is negative, -0.4%, when compared with the same period last year. This is the first time this has happened since the past ten years. So, what does it mean? The controls on energy and water subsidies has made people refrain from making purchases, including foodstuffs, consumables, and luxury goods. Then there were adjustments made to the allowances and incentives of government employees and some private sector employees. There is a change rate in this record figure for the cost of living in January 2017 (-0.4%) in comparison with December 2016 (-0.6%) as regards to foodstuffs and beverages. This is seen in the malls, hypermarkets, and retail outlets where the demand for goods has dropped. Meanwhile, deflation means a decrease in income to small and medium enterprises which are largely dependent on the middle class market. Therefore, the business sector has fallen into recession. This, in turn, has had ripple effects on the economy and has reflected poorly on the job Saudization percentages and on the creation of new job opportunities. However, at this time, when the National Transformation Program has been launched, deflation can be expected. It is a natural phase in any economic cycle provided that it is temporary. Nevertheless, recession in some advanced countries may prove to be an opportunity for expansion in the health, education and road sectors. Finally, consumption behavior is an important factor. It affects and is affected by prices. It is a behavior changeable only under the decisions governing it. Such decisions include subsidy regulations or removal, and decrease in spending.
