Domestic demand fuels Oman inflation

Muscat: Inflation in Oman climbed to a record 10.6 per cent in the first quarter of this year, peaking at an unprecedented 11.3 per cent in March alone, the Ministry of National Economy said on Sunday.

The increase was fuelled by strong domestic demand, massive growth in liquidity, and continued depreciation of the Omani riyal against the currencies of the major non-GCC trading partners.

The Consumer price index (CPI) rose from 9.7 per cent in January to 10.6 per cent in February, peaking at 11.3 per cent in March.

Food, rents and gold were the usual drivers of CPI increases in the Sultanate during the first quarter of 2008. Food and beverage prices rose 18.7 per cent in the first quarter.

Rents made a larger contribution to CPI increases in the first quarter than it has ever made, at 0.8 percentage points of the 3.8 per cent increase in the first quarter. Gold and jewellery prices increased 38.8 per cent.