By Abed Khazendar
Al-Riyadh newspaperINFLATION is a part and parcel of modern economies around the world. It is a term economists often use when they appear on news programs discussing the growth prospects of a nation. The year on year increase in the prices of goods and services has seen a corresponding rise in salaries to ensure people’s purchasing power is not adversely affected.

However, this has resulted in a dangerous cycle of ever-inflating prices as the cost of production continuously rises.

One of the best examples of this is the prices of cars and property. A car which cost SR20,000 in 1960 now comes at a price of SR60,000. Similarly, a medium size villa which used to cost SR120,000 is now worth more than one million riyals.

The latter is due to the astronomical rise in the cost of land due to the laws of supply and demand.

With the growing population, the price of land has gone through the roof! About 3000 sq ft of land purchased for SR10,000 in the past will now fetch you a million riyals.

Due to such inflation, the government decided to build 500,000 residential units at a total cost of SR250 billion.

Fadi Al-Ajaji, an economic advisor, said in a recent newspaper article that one third of inflation is driven by the rise in the price of commodities and housing. The actual rate rose from 8.9 percent to 9.2 percent in the last month alone.