RIYADH (Reuters)
Saudi Arabia will raise public sector wages and pensions by 5 percent and subsidize shipping costs to cushion its population from inflation, which soared to 16-year high in December, the state news agency reported.
The 5 percent increase in wages and pensions would last for three years as would a 50 percent subsidy on the cost of shipping, Saudi Press Agency said on Monday, citing a cabinet statement.
The cabinet also agreed to raise social insurance benefits by 10 percent, it said.
Like its Gulf Arab neighbors, Saudi Arabia is resorting to subsidies and price controls to check inflation because the central bank has to track U.S. monetary policy to maintain the value of the dollar-pegged riyal.
Inflation hit 6.5 percent in December, the highest since 1991.
