Oman inflation climbs to 1-yr high of 3.2 pct in May

Daily News Egypt
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MUSCAT: Oman’s inflation climbed to a one-year high of 3.2 percent year-on-year in May as key items such as food, transport and housing costs edged up, the Gulf oil producer’s data showed on Tuesday.

The global crisis reduced price growth across the Arab Gulf last year from record double-digit peaks in 2008, with the United Arab Emirates and Qatar seeing months of deflation.

Inflation in non-OPEC Oman started picking up again in December, when it rebounded from a low of 0.8 percent the previous month. It reached 3.0 percent in April but is still far away from the June 2008 high of 13.7 percent.

Consumer prices rose 0.2 percent month-on-month in May, following the same increase in the previous month, the economy ministry data showed.

Oman’s central bank said last week it needed to closely watch inflation in the second half of the year as price pressures in the Gulf state may increase as commodity prices rise and economic recovery gathers pace globally.

It also warned soaring prices my put a pressure on the currency if inflation differential to the United States widened further. Flexibility of Oman’s monetary policy is limited by the rial peg to the US dollar.

Food prices, the largest item accounting for 30 percent of the basket, rose 0.2 percent on the month in May, after a 0.3 percent increase a month before.

Housing costs grew 0.1 percent, down from a 0.2 percent rise in April, while transport prices were up 0.2 percent after remaining stable for three months in a row, the data showed.

The sultanate’s consumer prices soared in 2008 on imported inflation as a result of the weak US dollar.

Oman’s central bank head has said he expected inflation of 4-5 percent in 2010 due to imported price pressures. Analysts polled by Reuters have forecast inflation at 3.5 percent this year.



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