Bloomberg | 24 January 2011

Saudi Arabia has boosted investment in food production to counter rising prices, central bank Governor Muhammad Al Jasser said on Monday.

“Our king has asked that the government go and invest, and the private sector go and invest in countries that have high agricultural production potential,” Al Jasser told a news conference on Monday in Riyadh, the capital. “If you have more supply globally, prices globally will also stabilize or even go down.”

Saudi Arabia, the largest Arab economy and holder of the world’s biggest oil reserves, started encouraging food companies to invest in Africa and Asia in 2008, to reduce local grain production and conserve water. The government aims to end the cultivation of water-intensive crops, including wheat, in the country by 2016.

Inflation in the kingdom slowed to 5.4 percent in December, from 5.8 percent the previous month, after climbing to 6.1 percent in August. It will probably average 5.3 percent this year, with rents the “leading source” of higher prices, Jadwa Investment Co said.