Friday, August 17, 2007

The hard facts on inflation in Oman

Annual inflation in Oman accelerated to 5.9% in June, the highest in at least two and a half years, as food costs and rents jumped, official data showed.

The consumer price index rose to 110.3 points compared with 104.2 points in the year-earlier, according to data published on the Ministry of National Economy website. Inflation was 4.3% in May.

The cost of food, beverages and tobacco, which account for around 30% of the index, rose 11.1% in June, compared with 9.1% in the previous month. (Link)

Cost of food went up 11.1% in one month. Add the 9.1% the previous month and that's a 20% increase in just May and June!


7 comments:

Sleepless In Muscat said...

Muscati:

could you share the link(s) with us regarding this post, please?

illogicist said...

I'd be interested in knowing the full composition of the basket of goods used in the CPI...

Twister said...

Much of this is imported inflation, as the weakening US Dollar drags with itself the value of the GCC currencies down...this has been compensated in the economy by high oil prices, but it still hurts the CPI and the ordinary consumer...

It's about time the GCC countries give serious thought to currency revaluation...In Oct-Nov 2006, The AUD traded at about OMR 0.287 to 292...and now it's OMR 0.327...because the USD is dragging down the OMR along with itself due to the peg.

This imported inflation will only go down when the USD recovers or when the rial is revalued.

Twister said...

P.S. Another cause of this inflation is the sudden spike in demand of food items before gonu...which may have left a bit of a gap in the market. That component of inflation should go down over time...

muscati said...

Sleepless - I added the link.

Illogicist - Monthly economic statistics are available on the Ministry of National Economics website. The CPI details are on:

here

dillon said...

While it is true that inflation has increased sharply in Oman over the last year, it is best to be careful when trying to interpret the reported figures.

The official figures from the Ministry of National Economy show a year-on-year comparison of an average for a given period of 2006 compared with the same period of 2007.

At the end of of April, the "Food, Beverages and Tobacco" rate for Muscat for the given period was up 8.4% on the year before. In May the rate was up 8.5% and in June 8.5% - although the comparison periods are of different length since they all start in January!. These are high values but the trend is not increasing rapidly. Or is it?

The Reuters article seems to be using a slightly different source and appears to be saying the the FBT index was up 9.1% in the year to May and 11.1% in the year to June and that suggests annual inflation is up 2% in a month. However, the figures from the MofNE show an increase in the FBT rate between May and June of +1.57% (114.4 to 116.2. Nothing seems to match exactly.

I suspect that the inflation figure, whatever it is, will stabilise over the coming months since the dollar is "fairly": stable now. In other words, prices should stabilise in coming months and the headline figures will drop gradually, except for some components where supply shortages exist and price pressures remain.

allen said...

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