Saudi Arabia will distribute a public sector wage increase announced last month through cost of living allowances rising incrementally over three years, according to the state news agency.

Wages and pensions of state employees would rise five per cent per year for the next three years, the Saudi government said on January 28 as part of measures designed to help its 25 million people cope with rising inflation.

Public sector institutions would give employees an allowance of 5 percent of their basic salary in the first year, 10 per cent in the second year and 15 per cent in the third year, Saudi Press Agency reported on Tuesday, clarifying the January 28 decision.

Inflation in the largest Arab economy hit a 16-year peak of 6.5 per cent in December.-Reuters