The sharp declines in Saudi food prices were offset by a rise in rental costs.RIYADH: Saudi inflation eased to a nine-month low of 5.3 percent on an annual basis in January from 5.4 percent in December, as food prices fell from the previous month, data from Central Department of Statistics showed Wednesday. On a month-on-month basis, inflation stood at 0.1 percent in January, unchanged from December. But the Kingdom's central bank said in its quarterly report that there was “the possibility of continued inflationary pressures in the first quarter.” It gave no forecast for the quarter or 2011. Analysts expected consumer prices in the world's top oil exporter to climb higher this year helped by soaring global food prices. The largest Arab economy is seen expanding by 4.3 percent in 2011 following an estimated 3.8 percent growth in 2010, helped by robust crude prices and generous government spending. In December, the Kingdom announced an expansionary 2011 budget with plans to spend SR580 billion ($154.7 billion) this year, mainly on education and infrastructure projects. Analysts polled by Reuters expected inflation to reach 5.0 percent in 2011. Saudi inflation hit 5.3 percent in 2010, below a record high of 9.9 percent in the oil-boom year of 2008, but well above its long-term average of around 1 percent. Sama Governor Muhammad Al-Jasser said in January he was worried that a global rise in food prices may drive up inflation but remained committed to the dollar currency peg. The sharp declines in Saudi food prices were offset by a rise in rental costs, which went up 0.8 percent in January, but analysts expected prices to ease towards the end of the year. Food prices, which have the largest 26 percent weight in the basket, fell 0.5 percent on a monthly basis in January compared to a rise of 0.1 percent in the previous month. Transport costs were up 0.7 percent in January compared to 0.4 percent in December.