Food behind about half of Oman’s inflation: SQU economist

MUSCAT: Food and non-alcoholic beverages accounted for roughly half of Oman’s annual rise in consumer prices in September, a Sultan Qaboos University economist has estimated, as higher freight charges and longer shipping times added pressure on fresh-food supply chains.
Dr Osman Gulseven, Associate Professor of Economics and WTO Chair at Sultan Qaboos University, told the Observer in an exclusive Q&A interview that the growing cost of transporting food was an important factor behind the pressure facing importers and consumers.
Official figures from the National Centre for Statistics and Information show that food and non-alcoholic beverage prices rose 8.0 per cent in September compared with a year earlier, against headline inflation of 3.2 per cent.
Vegetable prices increased by 20.1 per cent year on year, fruit by 16.3 per cent and meat by 10.3 per cent. The monthly increase in vegetable prices was considerably smaller, at 2.0 per cent.
Although food and non-alcoholic beverages account for approximately 20.6 per cent of the consumer price basket, Dr Gulseven said their contribution to overall inflation was disproportionately large.
Using the published figures, he estimated that food accounted for approximately half of the annual increase in the overall consumer price index. He cautioned that a precise calculation requires the underlying index levels.
Dr Gulseven said freight charges, insurance, storage, refrigeration and domestic distribution costs could increase retail prices even without a corresponding rise in the prices charged by overseas suppliers.
He cited figures from an Omani fresh-produce importer reported by local media on October 7, showing container shipping charges from India rising from $1,800 to $8,400.
The importer also reported charges from China reaching as much as $15,000 per container, compared with $3,800 previously, while European freight charges increased from approximately $4,000 to $10,000.
These figures describe the experience of one importer on particular trade routes rather than average shipping costs across Oman’s food imports.
Some produce shipments from Africa were also reported to be taking more than 40 days, compared with approximately 28 days previously.
Gulseven said longer journeys raise refrigeration expenses and increase the risk of deterioration, making each kilogram of saleable produce more expensive to deliver.
The higher costs do not, however, establish that food importers or retailers are earning larger profits.
“CPI figures identify price changes but cannot establish whether commercial profit margins increased,” he said.
He explained that determining changes in profitability would require comparable purchase and selling prices for identical products, alongside information on transport, storage, labour, financing and spoilage costs.
“Higher costs may even reduce importers’ margins if they cannot pass these increases fully to consumers,” he said.
Dr Gulseven’s assessment builds on research he co-authored in 2025, Food price resilience in Oman: A data-driven approach, which examined the relationship between international and domestic food prices using monthly observations from January 2013 to January 2024.
The study identified strong links between global and Omani food prices, particularly in recent years, with cereals showing the strongest relationship.
However, the research covered cereals, dairy, meat, sugar and vegetable oils rather than fresh fruit and vegetables. Dr Gulseven acknowledged that it could not directly explain the sharp increase in fresh-produce prices recorded this September.
The Food and Agriculture Organization’s international Food Price Index reached 136.0 points in September, up 5.8 per cent from a year earlier. That measure tracks internationally traded food commodities and does not include fresh fruit and vegetables.
For households, the impact of higher food prices extends beyond the headline inflation figure.
Dr Gulseven said lower-income families, households with fixed incomes and those with limited savings are particularly exposed because essential food purchases absorb a larger proportion of their budgets.
“Maintaining expenditure by purchasing less food can conceal a substantial deterioration in living standards,” he said.
He cautioned that even if shipping costs and delivery times return to normal, relief at retail outlets may take time.
Improving cold storage, diversifying suppliers and transport routes, reducing clearance delays and publishing comparable wholesale and retail prices would help strengthen the food supply chain, he added.
He also called for commercially feasible and resource-efficient domestic production to improve Oman’s resilience to future supply disruptions.