Muscat – Oman’s annual inflation further increased in November after a sharp rise in prices for transportation and fish and seafood products during the month.
The sultanate’s inflation rate – which is based on the consumer price index (CPI) – increased to 3.56 per cent in November 2021 from 3.35 per cent recorded in the previous month, according to CPI data released by the National Centre for Statistics and Information (NCSI).
The annual inflation rate in November was at its highest level since 2011. The sultanate’s consumer prices in November inched up 0.12 per cent compared to October prices, the data showed.
An increase in inflation rate was expected this year after the implementation of value-added tax (VAT) in April. Rising commodities prices globally have also contributed to the higher inflation in recent months in the sultanate.
Sharp price increases for transportation group, fish and seafood products, and education have largely contributed to the overall inflation growth in November, the NCSI data showed.
The annual inflation rate in food and non-alcoholic beverages group – which has nearly 24 per cent weight in Oman’s CPI – decreased to 2.76 per cent in November this year from 3.42 per cent recorded in October. Consumer prices for food and non-alcoholic beverages group in November fell 1.23 per cent compared to the previous month.
Within the food items, fish and seafood recorded a 10.6 per cent jump in November prices compared to the same month a year ago, while prices for fruits rose 4.3 per cent on an year-on-year basis. Prices for vegetables also increased by 3.2 per cent year-on-year in November.
On the other hand, prices in transport group – which has more than 19 per cent weight in the CPI – jumped by more than 11 per cent in November compared to the same month a year ago. Furnishing, household equipment and household maintenance group also witnessed an year-on-year price increase of 1.44 per cent in November.
Prices for the group of housing, water, electricity, gas and other fuel items remained 1.24 per cent higher in November 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 2020. The inflation rate returned to positive territory in April 2021 after remaining negative for more than a year.
The average inflation rate during January–November period of 2021 stood at 1.34 per cent, according to NCSI data.
However, the spike in Oman’s inflation this year is not a surprise. International institutions such as the International Monetary Fund (IMF0, World Bank and global credit ratings agencies were already expecting Oman’s inflation to rise above 3 per cent level this year.
As per the IMF’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 over 3 per cent in 2021, reflecting the recovery of domestic demand and the introduction of VAT.
The IMF, in a recently released report, said that the inflation pressures have remained contained in the GCC countries but could begin to rise with higher global inflation. The fund expects inflation in the GCC to be contained below 3 per cent on average this year.