Gap between the rise in prices of commodities in Saudi Arabia and growth in salaries between 1982 and 2011 reached 700 percent after the prices in the cost of living index registered 765 percent rise, while the growth in per capita income registered 66 percent in 30 years, Fadhl Al- Bu'ainain, an economist, said. Economists have warned that the widening gap between salaries and price inflation might disturb the Saudi economy, especially with the change in consumption pattern for the individual and inflation factors. They attributed this difference between the rise in prices and growth in income to three basic factors - global inflation, the receding purchasing power of the Saudi riyal and large government spending, Al-Eqtisadiah reported Friday. The economists called for tackling this critical gap through striving to adapt the Saudi economy to inflation growth by creating real growth in the economic sectors, striking a balance between wages (salaries) and inflation and the concerted effort of the private and public sector in creating more jobs and increasing salaries. Sami Al-Nuwaissir, CEO of Sami Holding Company, said the rates of price increase in the past were to some extent proportionate to the salaries under the manageable life demands. This used to help individuals to save money, own homes and provide a decent life. However, the difference in the monetary value for the rise in prices and increase in inflation rates have made salaries not being proportionate to the inflation rates today. Hence, this makes the individual's income weak compared to the income of a person in the same job rank 20 or 30 years ago. Al-Bu'ainain further said "if those who are running the economy succeed in privatization, supporting the production sectors and increasing the number of jobs in the private sector so as to create an ideal balance between income and cost of living, this will ultimately achieve prosperity for the citizens." He attributed the increase in inflation of prices between 1982 and 2011 to the difference in the three major strategies for rise in prices in general, foremost of which is the global inflation, as the world witnessed a big inflation between 1982 and 2011 due to reasons related to production cost, scarcity, population growth, a tremendous increase in demand for commodities and services, weakness of some major currencies foremost of which is the dollar compared to the Japanese yen and several other currencies. This reflected negatively on the local inflation and led to feeding it with external factors or what is referred to as imported inflation. He said that it is natural for the high global inflation rates to have an impact on the Saudi market. This is a major reason for the rise in cost of living and inflation of prices. Moreover, Al-Bu'ainain said "the second strategy is the local currency, as the sharp drop in the dollar rate compared to other major currencies has led to weakening the local currency and weakened the purchasing power of the Saudi riyal that is officially pegged to the dollar. As the majority of local commodities are imported, it is natural for their prices to rise due to the drop in the rate of the riyal before the major currencies." He believes that the big negative impact was related to Japanese commodities that witnessed a sharp rise reaching double the previous prices compared to commodities of other countries. He said this is attributed to the decrease in the dollar rate compared to the yen from 260 yens in 1982 to nearly 76 yens at the beginning of 2012. Meanwhile, the recent financial policy strategy in increasing government spending and insistence on the expansionist spending approach due to developmental reasons have assisted and fed local inflation, particularly in the rents and foods groups. "Honestly, the external feeding of inflation is the one that has actually created the big difference in prices with a slight exception related to the past five years during which the financial policy was the main reason for the rise in prices and cost of living," Al
