JEDDAH: Government employees' 2011 salaries will retain the 15 percent inflation allowance extended to them over the last three years and the allowance will be provided to pensioners, according to sources. The allowance, which will be provided as long as inflation continues, will be calculated in the next year's budget, according to the sources. Government offices have recommended to higher authorities that the inflation allowance should stay in place. The Ministry of Finance has said that the first salary of the new Islamic fiscal year, which is Kingdom's official fiscal year, will be paid from this year's budget. Financial departments at the ministries have started carrying out the Ministry of Finance's instructions to make an early audit of the amounts needed to cover the 15 percent inflation allowance for 2011. The Ministry of Finance will cover any shortages to ensure the monthly allowance is paid on time, officials said. In August, consumer price growth in Saudi Arabia, the biggest Arab economy, climbed to an 18-month high of 6.1, far above levels in other Gulf countries, but still below 2008's record double-digit peaks. Saudi Arabian Monetary Agency (SAMA) Governor Muhammad Al-Jasser said recently that while the rate has declined, it is still a concern. “At 6.1 percent, the inflationary pressures are worrying,” Al-Jasser said at an annual news conference in September. “We are monitoring them.” Al-Jasser said there was ongoing coordination with the government to manage fiscal policy in a way that would not increase inflationary pressures. Conditions have not changed in recent months so the inflation allowance should continue, said Ali Al-Mazid, an economist. “It doesn't make sense to take out the allowance now, especially after it has just been extended to pensioners,” he said. “The government has put the comfort of its people at the top of its list of priorities.” Abdulrahman Al-Sanee, a professor of marketing at the College of Business Administration in Jeddah, said price hikes have hit essential commodities such as medicine, food, and building materials. A Saudi economic committee-member said essential and luxury commodities have witnessed a “gradual increase in their prices.” Inflation is a problem in a number of sectors because a price increase for one commodity simply leads to increases in the prices of others, Essam Mustafa said.
