DUBAI: Saudi Arabia's inflation rate fell to 4.9% in March from 5.2% the previous month, easing further to its lowest since authorities hiked value-added tax last year to increase non-oil revenues as crude prices declined.

"Consumer prices still reflect an increase of the Value Added Tax (VAT) from 5% to 15% in July 2020," the General Authority for Statistics said.

The annual 4.9% increase was mainly due to food and transport prices, which rose 10.2% and 10.5% respectively, it said.

Annual inflation was 3.4% in 2020, picking up in the second half of the year after the VAT hike. The first half had seen mild inflation, following a deflationary trend in 2019, when the annual rate was -2.1%.

The economy of the world's top oil exporter shrank 4.1% last year, but the rate of decline slowed in the third quarter as some COVID-19 restrictions were lifted.

The economy is expected to grow 2.9% this year, the International Monetary Fund has estimated. It has forecast consumer price inflation will average 2.7% this year.