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Wed 15 Mar 2017 02:20 PM

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Oman inflation rate rises to highest level since 2012

Inflation has been rising as the gov't raises domestic fuel prices to reflect recent increases in oil prices

Oman inflation rate rises to highest level since 2012

Oman's inflation rate rose to its highest level since at least 2012 in February, according to official figures.

Oman's National Centre for Statistics and Information released consumer price data, showing annual inflation at 2.4 percent.   

Inflation has been rising as the government raises domestic fuel prices to reflect recent increases in oil prices, and in order to reduce the subsidy burden on state finances.

Oman's government earlier this month gave itself breathing space from the pressure of financing a large budget deficit by selling $5 billion of international bonds.

At the beginning of this year, Oman said it planned to cover a projected 3 billion rial ($7.8 billion) budget deficit in 2017 with 2.1 billion rials of international borrowing, 400 million rials of domestic borrowing and the drawdown of 500 million rials from financial reserves.

In December, a report said the Central Bank of Oman will be forced to follow the US Fed's tightening cycle over the coming months, despite low inflation and rising liquidity pressures at home

BMI Research said in a research note that combined with low commodity prices, the strength of the US dollar, and weaker economic activity, Oman will adopt a more hawkish monetary policy to lead to average consumer price inflation of just 1.5 percent over 2017.

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