Font Size

- Aa +

Sun 10 Aug 2008 01:21 PM

Font Size

- Aa +

Oman inflation close to 14%

Annual inflation in sultanate hits 13.73% in June on rising food prices and currency peg to US dollar.

Inflation in Oman rose to a record near 14 percent in June as increasing food prices and a currency peg to the weak US dollar pushed costs in the Gulf state higher for a 14th consecutive month.

Food, beverage and tobacco costs - which account for almost a third of the consumer price index - jumped 23.7 percent, the Oman Ministry of National Economy said in a monthly report on its website.

Inflation is soaring across the world's biggest oil-exporting region, where economies that have boomed on the high price of oil are being hit by higher import costs.

Inflation, which hit 13.73 percent in June, has been accelerating since May 2007, with the consumer price index jumping to 125.1 points on June 30, compared with 110 points a year earlier, ministry data showed.

"There always seems to be a jump around [the holy month of Ramadan], but we possibly see it coming to a peak soon," said EFG-Hermes senior economist Monica Malik.

Oman and most of its neighbours, including Saudi Arabia, peg their currencies to the US dollar, which is driving up import costs.

Currency weakness is only part of the problem, as countries across the world suffer from high global commodity prices. Oil has been as high as $147 a barrel this year, although it has retreated to about $116 a barrel, still almost double this time last year.

Rents, which account for just over 15 percent of Oman's index, eased to 14 percent in June from 16.6 percent in May, the data showed.

"It's encouraging to see house prices stabilising," Malik said.

The central bank's deputy chief said in July inflation had probably hit its peak at a record 13.2 percent and is likely to stabilise as the impact from a global food crisis wanes. (Reuters)