UPDATE 3-Saudi Arabia says to be prudent in fighting inflation

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By Inal Ersan

RIYADH, Feb 21 (Reuters) - Saudi Arabia said it will act prudently to control inflation that surged to a record 6.5 percent in December on higher rent and food costs.

The world's largest oil exporter, which has not altered the value of the riyal to the dollar in 22 years, should avoid "easy solutions," said central bank governor Hamad al-Sayyari, referring to calls to drop its currency peg to the dollar.

"Many commentators blame the exchange rate and speak as if the matter is simple, as if de-pegging the riyal's link to the dollar would solve the problem of inflation," Sayyari said. "The truth is that the subject is far more complicated than that ... the impact of the exchange rate on local prices is limited."

Saudi Arabia's dollar peg limits its ability to fight inflation. It is obliged to mirror U.S. interest rate moves at a time when the United States is cutting rates to ward off recession.

The U.S. economy is slowing but Saudi Arabia's is growing due to a five-fold increase in oil prices over the last six years.

Addressing the Shura Council, a body which advises the king, Sayyari said the govenment will "deal with the matter with wisdom and prudence, and not surrender to superficially easy solutions."

Sayyari spoke at a closed session on Sunday, but the state television aired the remarks on Thursday.