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Higher than expected inflation in Oman
Source: BI-ME , Author: Moussa Ahmad
Posted: Sun September 16, 2007 12:00 am

OMAN. Annual inflation in Oman hit 5.98% in July, up from 5.57% in June, on food and rent increases, official data has revealed .

The Ministry of National Economy website shows the consumer price index at 111.6 points compared with 105.3 points in the same month last year.

The main increases are in food, beverages and tobacco, which rose 11.3% and rents which have gone up by 8.5%.

Qatar, Saudi Arabia, the UAE, Kuwait, Bahrain and Oman  agreed in 2003 to peg their currencies to the dollar as a step towards creating a single currency by 2010.

Kuwait, where inflation rose to 12-year highs above 5% in March, April and May, abandoned its peg to the dollar in May  saying the US currency's weakness was fuelling inflation by making some imports more expensive.

Because of the peg to the dollar, GCC countries tracks US interest rates, limiting the central bank's ability to fight inflation. Qatar, which is contending with inflation almost three times as high as Kuwait, was tipped by analysts along with the UAE as likely to change exchange rate policy.

Oman has stressed its committment to the dollar peg.

The decline in the dollar is a "passing phase," Oman's acting central bank governor Mohammed Nasser Al Jahadmy said earlier.

Gulf states are  concerned by the growing possibility for a US interest rate cut this month. GCC rates usually follow the Fed but some economists say it is unlikely the booming Gulf, cyclically out of step with the US, will follow any Fed decision to cut rates this time.


 

 

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