Saudi Arabia is worried that a global rise in food prices may drive up inflation but remains committed to its dollar currency peg, the Opec member's central bank governor said on Monday.

Inflation in the world's top oil exporter, the largest Arab economy, climbed to an 18-month high of 6.1 percent last August, fuelled by swelling food and housing costs. It has since eased, but analysts expect more price pressures to come.   

'One of the things that worry us is inflation,' Central Bank Governor Muhammad Al-Jasser told reporters on the sidelines of a conference in the Saudi capital.

Jasser's comments echo recent remarks by the kingdom's finance minister Ibrahim Alassaf, who said inflation was easing a little but that the G20 member should remain vigilant.

Saudi consumer price growth eased to 5.4 percent on an annual basis in December from November's 5.8 percent, but an expected surge in global food prices this year might add to price pressures in the import-reliant desert kingdom.   

The country has emerged as a major buyer of wheat and wants to build up reserves of basic commodities such as wheat, rice, oils and sugar to shield against price rises as its economy benefits from robust oil prices.

Analysts polled by Reuters in December expected Saudi inflation to reach 5.0 percent on average this year after 5.3 percent in 2010.

Jasser said Saudi economic growth this year should be as good as 3.8 percent in 2010, if not better. He later told a news conference that it could reach up to 4.5 percent.   

He also reiterated the kingdom's long-standing commitment to its dollar currency peg, saying it served the country well.   

Periods of dollar weakness tend to question the sustainability of dollar pegs in the Gulf due to imported inflation risks. Kuwait is the only Gulf country to have dropped its peg to the US currency, switching to a currency basket in 2007 to rein in then-soaring inflation.

The dollar touched a new two-month low of $1.3648 against the euro on Monday. The single European currency has rallied some 6 percent in the past two weeks, helped by easing worries over euro zone debt.

Gulf central banks have to keep their interest rates close to US benchmarks to avoid excessive pressure on dollar pegs due to hot money inflows.   

Jasser also said there was no deadline for a long-delayed Gulf currency union, where Saudi Arabia plans to take part with Kuwait, Qatar and Bahrain. - Reuters