Sunday 22 April 2018

Oman inflation surges to 25-month high in May

Dubai, July 9, 2011

Annual inflation in Oman hit the highest level in 25 months in May due to a rise in food prices, data showed on Saturday, while living costs in Saudi Arabia in June rose slightly from the previous month on food and housing components.

Inflation in the Gulf, the world's top oil exporting region, was expected to creep higher this year on robust global commodity prices, a weak dollar and increased government spending following unrest in the Arab world.

In Oman, annual inflation hit 4.4 per cent in May, the highest level since April 2009, data from the country's finance ministry showed, after a 4.1 increase in the previous month.

On the month, consumer prices grew 0.4 per cent in May, up from a 0.3 per cent rise in April. Consumer price growth was unchanged on both annual and monthly basis in April.

Analysts expected prices in the small non-Opec oil producer, which was hit by public unrest this year, to edge higher on robust global food and commodity prices as well as additional government spending to defuse social tensions.

'Food prices are still pretty close to all-time highs and it takes a while for these to get transferred to final consumers,' said Paul Gamble, head of research at Jadwa Investment in Saudi Arabia.

Food costs, which account for the largest weight of 30.4 per cent in the consumer basket, jumped by 0.9 percent month-on-month in May after a 0.3 per cent dip in April.

Rents, making up 21.4 per cent in the basket, were unchanged in May, the data showed.

'Retailers took advantage by increasing shelf prices when Sultan Qaboos ordered a pay hike to all Omani workers in March,' Salaam al-Rahbi, a financial analyst at Muscat Financial Company, said.

The usually tranquil Sultanate was hit by months of protests in February, following uprisings that toppled rulers in Egypt and Tunisia. Omanis, however, called mainly for higher wages, more jobs and an end to graft rather than a change of government.

Some 100 people demonstrated in the Omani industrial city of Sohar on Friday demanding the release of their colleagues who were jailed for protesting earlier this year.

The country's finance minister said in June a $10 billion aid package pledged to Oman by its wealthier Gulf neighbours was unlikely to take off this year and spending will soar 11 per cent on social measures.

Analysts polled by Reuters in June forecast average inflation to reach 4 per cent this year.-Reuters


Tags: Oman | inflation | High | food costs |

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