Oman Inflation Accelerates to Record 11%, Led by Food
Written on April 14, 2008
Omani inflation accelerated to a record 11 percent in February, from 10 percent in the previous month, as the cost of food and housing soared.
Food prices jumped 20 percent, up from 17 percent in January, the Omani Ministry of Economy said on its Web site today. Rents increased an annual 14 percent in February, matching January's increase.
Inflation has accelerated to records across the Gulf as the dollar's decline made imports more expensive, global food costs rose and surging economic growth contributed to a shortage of housing and infrastructure. Gulf states have been under pressure to revalue their currencies or drop their pegs to the dollar after the U.S. currency fell 13 percent in the past 12 months on a trade-weighted basis.
“Food prices are rising on the back of the fact that there is global food inflation,'' said Mary Nicola, senior economist at Standard Chartered Plc, in a telephone interview from Dubai today. “Oman is a net importer of food, so you will likely continue to see food prices rise.''
Oman, the Middle East's largest non-OPEC oil producer, has no plans to drop the rial's peg to the dollar and is using fiscal policy as the main tool to lower inflation, central bank Governor Hamud Bin Sangur al-Zadjali said in a March 15 interview payday loans in 1 hour.
The sultanate has boosted salaries, increased social security payments and subsidized the cost of basic foods in an attempt to mitigate the effects of rising prices.
The country's decision to raise wages for government employees by as much as 43 percent will stoke inflation in the Persian Gulf state, Standard Chartered Plc said Feb. 10.
“Oman would be well-served by ending the rial's peg to the dollar, considering how much imported inflation impacts prices,'' said Nicola today.
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