July’s inflation rate eased down from the height of the previous month to land at 3.3 per cent, while the nation’s trade surplus reached a 24-month high in April of $1.6 billion
In Oman the July inflation rate fell from a 13-month high in June, according to recent data. The same report noted that foreign trade on hydrocarbon exports pushed the surplus in April to a height that hasn’t been seen in two years.
Prices have been under pressure in the Gulf nation this year, seen mostly in higher housing and food costs, while the oil producing country’s trade balance has seen improvement as the price of crude climbed.
Consumer inflation dropped down a notch from June’s rate of 3.5 per cent to hit 3.3 per cent in July (calculated on a year-on-year basis), according to data at the ministry of the economy. Analysts are expecting that rate to rise again in the next few months.
The current rates are considerably lower that the highs recorded in June of 2008, where Oman reported 13.7 per cent inflation.
Prices in Oman dropped slightly on a monthly calculation, falling 0.1 per cent. This is the first decline in the monthly rate since March of this year and was mainly due to slowed growth in food and housing costs being offset by dropping prices of clothing and personal care products.
Chief Economist at Dubai’s HSBC Bank, Simon Williams, said he did not perceive this as the beginning of a downhill trend.
Williams expects that the prices will begin to rise in August and continue until the end of this year, caused by the economic recovery and pushing inflation above 4 per cent by the close of the year.
Historically, food prices jump throughout the holy period of Ramadan as families sit down to large and elaborate evening feasts after fasting all day long. Ramadan ended in the middle of September.
Oman’s central bank issued a warning in July that inflation would be watched closely during the last half of the year as the currency might be under pressure from the rate movement.
The total credit in Oman, an oil producer not under Opec, climbed 6.4 per cent in the month of July. This rate of growth is the quickest over the last five months, but falls significantly short of the double digit growth seen during the first six months of 2009. The growth of money supplied was also under 10 per cent.
The foreign trade surplus in Oman swelled to 620 million rials (or $1.6 billion) in the month of April, a 24-month high. Total exports rose 72 per cent over last year, boosted mostly by a jump in hydrocarbon exports. Growth of imports decelerated considerably to 11.9 per cent, according to data.
Williams noted that recovering oil prices for 2010 are expected to remain steady through to the end of the year, pushing export earnings even higher above the data for 2009.
A recent Reuters’ poll of analysts forecasted that Oman’s inflation should average at 3.5 per cent for 2010 and the nation will report a surplus in current accounts at 3.0 per cent of GDP.Paul Holdsworth, Staff Writer, Gulf Jobs Market News