Helped by moderating global commodity prices and a strong US dollar, to which Oman keeps its currency pegged, the sultanate's annual inflation fell to a 40-month low in April.
The annual inflation, based on the consumer price index (CPI), dropped to 1.2 per cent in April, the lowest level since December 2009 when it hit a low of 0.9 per cent. Annual inflation came in at 2.3 per cent in March this year, data from the National Center for Statistics and Information (NCSI) showed.
The price of foodstuff, which accounts for over 30 per cent of Oman's CPI basket, fell 0.8 per cent in April from the previous month, while the same increased 1.5 per cent on a year-on-year basis. Among the category's constituents, fish and sea product prices declined 8.7 per cent in April from March. While the prices for most food items remained stable for the past few months, oil and fats, fruits and vegetables also witnessed a marginal decline in April compared to the previous months.
Personal-care items and services dropped by seven per cent in April, on month.
Speaking to Muscat Daily, Dr Fabio Scacciavillani, chief economist of the Oman Investment Fund (OIF), said international currency movements and moderating global commodity prices have been favourable in driving down inflation in Oman.
He said, "International commodity prices have either stabilised or are falling in terms of the dollar, to which the rial is pegged. The Japanese yen has also depreciated significantly against the dollar which has made imports from Japan cheaper. To some extent, there is also a positive impact on imports from Asian countries like India whose currency has fallen sharply against the dollar."
"In addition, internal drivers like rents and utilities remained stable in terms of prices, which helped soften overall inflation."
Rents, water, electricity and fuel costs, which account for over 21 per cent of the consumer price basket, rose 0.6 per cent year-on-year in April, but fell 0.2 per cent on a monthly basis.
Dr Scacciavillani added, "For the foreseeable future, we do not expect commodity prices to rise unless unpredictable events happen. But in the coming months, as the new school session starts and the cost of education increases that might push inflation slightly higher. However, these are seasonal effects."
In a report released last week, the International Monetary Fund (IMF) said overall consumer price inflation in Oman has declined as moderating international food prices and government subsidies on core goods and services held down pressures from increases in public and private-sector wages and salaries. The IMF has projected Oman's average inflation at 3.1 per cent for 2013 and 3.2 per cent for 2014.