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Fri 14 Jun 2013 11:16 AM

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Oman inflation slows to new 40-month low

Official figures also show that year-to-date budget surplus drops to $2.7bn

Oman inflation slows to new 40-month low

Oman's inflation slowed to 1.2 percent in April, the lowest level since December 2009, data from the country's National Centre for Statistics and Information has showed. 

Food prices, which make up over 30 percent of the basket, increased 1.5 percent on an annual basis in April but fell 0.8 percent from the previous month. 

Rents and energy costs, which account for over 21 percent of consumer expenses, rose 0.6 percent year-on-year but dipped 0.2 percent month-on-month in April.

Analysts polled by Reuters in April expected average inflation of 3.2 percent in 2013, up from 2.9 percent in 2012.

Separately, Oman's year-to-date budget surplus reached OR1.034bn ($2.7bn) at the end of April, a nearly 30 percent drop from the surplus in the same period a year ago, data from the finance ministry showed.

Analysts polled by Reuters in April forecast that the non-OPEC oil exporter would post a fiscal surplus of 3.8 percent of GDP in 2013.

Oman based its 2013 budget on a projected oil price of $85 per barrel, expected expenditure of OR12.9bn and a deficit of OR1.7bn.

On Wednesday, the International Monetary Fund said Oman needs to contain state spending and raise non-oil revenue in the medium term to keep its fiscal balance sustainable.

"Spending restraint and non-oil revenue enhancing measures are needed to support a sustainable fiscal policy in the medium term," the IMF said following annual consultations with Oman.

"The mission recommends an initial adjustment of 1 percent of GDP (gross domestic product) in 2013 by rationalising the planned increase in workforce, and restraining goods and services spending," it said on its website.

The sultanate needs to adjust its fiscal balance by around 10 percent of GDP in total over the medium term as its budget health is becoming a significant challenge, the IMF added.

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