Annual inflation in Oman accelerated to a record 13.24 per cent in May from 12.43 per cent in April as food prices soared, official data showed yesterday. Oman's consumer price index hit 123.2 points on May 31, compared with 108.8 points on the same day a year earlier, the Ministry of National Economy said in a monthly report on its website. Food, beverages and tobacco, which account for almost a third of the index, jumped 22.9 per cent. Rents leapt 16.6 per cent.
Inflation is accelerating across the world's biggest oil-exporting region where most countries, including Oman, peg their currencies to the weak US dollar. Last month the UAE saw inflation hit a 20-year high rising to 11.1 per cent last year with soaring global oil and local rental and food prices to blame. Rents and household costs soared 17.5 per cent in the Emirates. Mortgage lending in the UAE, which opened its property sector to foreign investment in 2002, almost doubled last year amid a building boom, central bank data showed last week.
Total home loans at the end of December were worth Dh58.86 billion (US$16.02bn) compared with Dh31.02bn a year earlier, the central bank said in a quarterly report on its website. Banks have boosted their mortgage offerings, encroaching on the market share of home financiers like Amlak Finance, which have been expanding in new markets, including Egypt and Saudi Arabia, as competition intensifies at home. The Dubai-based Islamic mortgage lender posted a 74 per cent jump in second-quarter profit this year as its home loan business grew.
Emirates NBD, the Gulf region's biggest bank by assets, said in February it expected to almost double mortgage lending this year as lower interest rates encourage home buyers. On Saturday the Abu Dhabi Department of Planning and Economy announced it had started tracking prices of 53 commodities, mainly food, and would release findings every month to keep better track of inflationary trends in the emirate.
The commodity price index includes food, beverages and tobacco items that account for 14.91 per cent of family spending in the capital, the department said. In June, the index showed the price of Basmati rice from Pakistan rose 85 per cent and potatoes surged 155 per cent, while the cost of most milk products held steady. Abu Dhabi said last month it would use the findings of a household spending survey this year to modify an outdated consumer price index to more accurately calculate inflation.
Inflation in Abu Dhabi hit 11.7 per cent last year and held at 11.5 per cent in March, official data showed this month. Last week Egypt saw a sharp rise in urban inflation to 20.2 per cent in the year to June, driven by monthly price rises in food and entertainment, the state statistics agency, CAPMAS, said. The rise added to political pressure on the Egyptian government, which had faced a wave of strikes and protests over price increases. The urban inflation rate compared to 19.7 per cent in the year to May.
"These are not ordinary or normal conditions," said Rachid Mohammed Rachid, the Egyptian minister of foreign trade and industry said. "Recently we've been faced with the fact that we may not be able to protect our citizens from inflation. One of the few commodities that we could do something about was rice, because with rice we have some self-sufficiency and some extra for exports." Egypt has responded to public anger over inflation by making more cheap food available on a ration-card system. Food inflation has hit the poor especially hard, with many spending more than half their income on food.
Overall price increases had however slowed on a monthly basis. Urban inflation rose 0.6 per cent in the month to June, versus 2.7 per cent in the month to May, CAPMAS said. Food and beverage price increases slowed last month, rising 0.8 per cent compared to 3.6 per cent a month earlier. Prices for culture and entertainment rose nine per cent in the month to June, but all other price baskets, including those for utilities and transport, showed zero inflation for the month.
"This is a positive development indicating a drop in inflationary pressures in June," said Reham el Desoki, a senior macroeconomy analyst at Beltone Financial. "We believe the CPI will end the year in the high teens, averaging around 15 to 17 per cent. We are not out of the woods yet," she said. Beltone had earlier said it expected year-on-year inflation to hit roughly 22 per cent last month, based on a forecast monthly increment of about two per cent.
The rural and complete country indexes are updated every other month, so economists focus on the monthly urban index. Meanwhile, Oman posted a budget surplus of 912 million Omani rials (Dh8.8bn) for the first quarter of this year after higher oil prices drove the sultanate's oil revenues up by a record 55.8 per cent, the Ministry of National Economy in Oman said yesterday. The surplus would be used to strengthen the state's financial reserves.
Oil revenues soared by 55.8 per cent to 1.6m rials for the first quarter from 1.03m rials for the same period last year. The average price of Omani crude soared to US$88.11 (Dh323.63) per barrel for the first four-month period of this year from $56.89 a barrel for the same period last year. However, gas revenues fell 23.8 per cent to 212.8m rials for the first quarter, which is attributed to last year's ban on gas exports to the UAE.
On Friday oil hit a fresh high leaping $5 to above $147 a barrel, spurred by growing worries of threats to supplies from Iran and Nigeria and the possibility of a strike by Brazilian oil workers later this week. * With Agencies