UPDATE 2-Saudi inflation nears 10 pct, ups pressure on govt

(Adds analysts' comment, details)

By Souhail Karam and Daliah Merzaban

RIYADH/DUBAI, April 27 (Reuters) - Inflation in Saudi Arabia jumped to almost 10 percent in March, its highest since at least the oil boom of the 1970s, raising pressure on the state to offset price pressures on the oil exporter's 25 million people.

Inflation is a key challenge across the Gulf Arab region, where governments which peg their currencies to the ailing dollar are raising wages and subsidies, bringing in price controls and tightening lending curbs to dampen the impact of price rises.

In Saudi Arabia, the world's largest oil exporter, inflation accelerated for a 10th straight month to 9.6 percent in the year to March 31, compared with 8.7 percent in February, the state-run Saudi Press Agency (SPA) reported on Sunday.

Saudi inflation almost doubled in the six months to March, driven mainly by surging rents and food prices.

The rental index of the largest Arab economy soared 15.8 percent in March, while food and beverage costs rose 14.2 percent. The rental index includes fuel and water costs.

"There is a greater level of disparity in living standards in Saudi Arabia and the government will be mindful about the impact of higher prices on the local population," said Monica Malik, senior economist in Dubai at investment bank EFG-Hermes.

Subsidies targeted to help lower income Saudis, state employee cost-of-living allowances and lower import levies on various food items are among measures Saudi Arabia has introduced to tackle inflation this year.