|
Muscat, Dubai: Annual inflation in Oman, one of six Gulf oil producers, surged above 10 per cent this year for the first time in at least 18 years, highlighting the cost of being pegged to the ailing dollar as food prices soared.
Food, beverage and tobacco costs - which account for almost a third of the consumer price index - surged 17 per cent in January and 19.6 per cent in February, the Omani Ministry of National Economy said on its website yesterday.
Inflation climbed to 10.1 per cent and 11.1 per cent in the two months, respectively, the ninth consecutive rise. The consumer price index was at 120 points on February 29, compared with 108 points a year earlier.
No quick fix
"There is no quick fix," Omani Economy Minister Ahmad Bin Abdul Nabi Mekki said on the sidelines of an investment conference in the Omani capital, Muscat, yesterday. "Inflation will take its natural course in 2008."
The US dollar has lost a third of its value against the euro since the start of 2006, dragging down the currencies of Gulf oil producers such as Saudi Arabia and Oman that are pegged to the greenback. That has made some imports more expensive.
"The very sharp and sustained upward trend on inflation is causing real alarm, but the policy response has been limited," said Simon Williams, regional econ-omist at HSBC Holdings.
Omani inflation has doubled in eight months.
Cereal prices were up 32.7 per cent in February, relative to a year ago, fish 50 per cent and eggs 24 per cent, according to the data. Rents, meanwhile, were 14.1 per cent higher.
The dollar peg means Gulf oil producers have been cutting interest rates in line with the United States, which is looking to ward off recession, while Gulf economies are surging on a five-fold increase in oil prices.
Wealth: Money supply
Oman's annual money supply jumped 40.5 per cent in February, its fastest pace in at least four years.
M2, the broadest measure of money circulating in the Omani economy, hit 6.44 billion rials ($16.73 billion) on February 29, compared with 4.58 billion rials a year earlier, the Ministry of National Economy said on its website.
It was the fastest pace of growth in Oman - which pegs its rial currency to the dollar - since at least 2004.
Narrow money (M1), the category of the money supply that includes all physical money and funds held in current accounts, surged 65.8 per cent in February to 2.13 billion rials.
|
