Saudi Arabia's plan to raise wages for most of its military staff could further boost inflation in the kingdom, after it hit a 17-month high in July, analysts said on Wednesday.   

The world's top oil exporter approved this week a one-off wage rise for all soldiers as well as top officers, but did not give details.

An official at the Military Service Council told Al-Madina paper that soldiers' pay would jump 30 percent, a net monthly increase of some 640 riyals ($171), while top officers would get 1-4 percent more with the raise seen within a month.

Defence Ministry's spokesman General Ibrahim Al-Malek declined to comment. "It will not mean a significant increase to existing inflationary pressures ... but the impact will not be negligible," said John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh.

"The impact will immediately follow the implementation through higher demand and there is also tendency by participants in the market to exploit such news to jack up prices," he said.

Saudi inflation climbed to 6.0 percent year-on-year in July, matching its March 2009 level, fuelled by rising food and housing costs.

It is well above rates seen in other Gulf countries, but still far from a record peak of 13.7 percent in June 2008. At about $41 billion, military expenditure accounted for some 33 percent of the Opec member's budget last year, according to the finance ministry's website.   

Much of the army's budget is spent on salaries but a surge in oil receipts in recent years has raised the amount of funds available for purchases of equipment and weapons.   

The  kingdom does not provide statistics of its military forces. Diplomats estimate the Saudi army to number some 175,000. - Reuters