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Sun 19 Oct 2008 01:02 AM

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Oman's inflation stays above 13%

Food, beverage and tobacco costs in Gulf state jump 23.5% in August while rents are up 19.5%.

Annual inflation in Oman held above 13 percent for a fourth consecutive month in August as food costs and rents rose more rapidly, official data showed on Saturday.

Food, beverage and tobacco costs, which account for almost a third of the index, jumped 23.5 percent compared with a year earlier, the Ministry of National Economy said in a monthly report on its website.

Food costs in the Gulf Arab state had risen 22.9 percent in July, when inflation eased for the first time in 14 months to 13.35 percent. Inflation picked up again in August, to 13.67 percent.

Oman, like most of its neighbours in the world's biggest oil-exporting region, pegs its rial to the dollar. This stoked inflation over the past two years as the US currency had fallen to record lows against the euro, driving up import costs.

Global food and building material costs also soared in the first half of the year because oil prices were ratcheting higher, eventually reaching record highs above $147 a barrel in July.

That drove up construction costs and house prices across the region. Rents, which account for 15 percent of Oman's consumer price basket, climbed 19.5 percent in August from a year earlier, compared with a rise of 17 percent in July, the data showed.

The consumer price index climbed to 127.2 points on Aug 31 compared with 111.9 points a year earlier, the ministry said.

Inflation in Oman, which has more than doubled in a year, is likely to fall below 10 percent by early next year due to the appreciation of the US dollar, Oman Central Bank Executive President Hamood Sangour Al-Zadjali said in September.

Oil prices have also tumbled since July, falling to a 13-month low near $74 a barrel last week, which should ease price pressures as the west faces its worst financial crisis since the Great Depression.

Oman's central bank has tightened lending curbs three times in less than a year to rein in money supply growth.

Inflation in the Gulf state is likely to average 9.3 percent this year, according to a Reuters poll in May. (Reuters)

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