Oman’s inflation rate further increased in July as consumer prices rose after a surge in global prices of many commodities and the implementation of value-added tax (VAT) in April.
The sultanate’s annual inflation rate, which is based on the consumer price index (CPI), increased to 2.2 per cent in July 2021 from 1.25 per cent recorded in the previous month, according to CPI data released by the National Centre for Statistics and Information (NCSI).
Consumer prices in July 2021 remained 0.75 per cent higher compared to June this year, the data showed.
A moderate increase in Oman’s inflation rate was expected after the implementation of VAT in April. Sharp price increases in transport group, non-alcoholic beverages and tobacco products largely contributed to the overall inflation growth in July.
The inflation rate in food and non-alcoholic beverages group, which has nearly 24 per cent weight in Oman’s CPI, jumped to 1.18 per cent in July compared to the same month a year ago.
Consumer prices in food and non-alcoholic beverages group in July increased by 1.41 per cent compared to June, mainly due to a 6.6 per cent surge in prices of non-alcoholic beverages.
Within the food items, prices of fruits in July inched up 0.43 per cent year-on-year while vegetable prices decreased 0.77 per cent on year-on-year basis.
On the other hand, prices in the transport group jumped by 7.8 per cent in July compared to the same month a year ago. Furnishing, household equipment and household maintenance group also witnessed an year-on-year price increase of 1.32 per cent in July.
Prices in the group of housing, water, electricity, gas and other fuel items remained stable in July compared to the same month of 2020.
The sultanate’s annual inflation averaged under 1 per cent over the six years to 2019 and was negative during the year 2020. The inflation rate returned to positive territory in April 2021 after remaining negative for more than a year.
The average inflation during the January–July period of 2021 stood at 0.48 per cent.
However, on the back of the 5 per cent VAT and rising commodities prices globally, Oman’s average inflation rate is expected to rise above 3 per cent this year.
As per the International Monetary Fund’s forecasts, Oman’s annual average inflation is expected to rise to 3.8 per cent in 2021, mainly due to the implementation of VAT and increase in global prices.
Similarly, the World Bank in its latest economic outlook for Oman said the inflation is projected to pick up to 3 per cent in 2021, reflecting the recovery of domestic demand and the introduction of VAT.