MUSCAT: Oman has successfully maintained one of the lowest inflation rates globally, thanks to proactive economic policies aimed at balancing financial, economic and social stability. Despite global inflationary pressures caused by the pandemic and geopolitical tensions, Oman’s inflation rate has remained moderate, reflecting the government's effective economic management.
The pandemic-induced disruptions in 2020 led to supply chain issues and rising costs in services and food commodities. These challenges were further exacerbated by the Ukraine crisis, affecting energy prices, shipping and essential goods such as grains, vegetable oils and dairy products. Global inflation surged to record highs in 2022 due to these combined factors.
Oman’s government adopted timely measures to mitigate the impact of global inflation on local markets. As a result, the country maintained a stable inflation rate within the targets set in its Tenth Five-Year Plan (2021-2025). Data from the National Centre for Statistics and Information revealed that Oman’s average inflation rate stood at 1.7% from 2021 to 2023 and fell below 1% by the end of 2023. In 2024, the inflation rate averaged around 0.8% from January to October.
Inflation rates varied across Oman's governorates, with Al Batinah South Governorate recording the lowest at 0.4%, followed by Muscat Governorate and Dhofar Governorate at 0.6%. Al Sharqiyah North Governorate, Al Dhahirah Governorate and Al Buraimi Governorate reported rates between 0.7% and 0.8%. The highest inflation rates were in Al Sharqiyah South Governorate at 1.9% and in Musandam Governorate and Al Wusta Governorate at 1.6%. Geographical factors and local economic activity contributed to these regional differences.
The decline in annual inflation by October 2024 compared to the previous year was supported by price stability in housing, utilities, communications and tobacco sectors. A reduction of 2.6% in transportation costs further eased inflationary pressures, despite slight price increases in personal goods, food and healthcare services.
The International Monetary Fund (IMF) reported that Oman’s inflation rate decreased to 0.6% by the third quarter of 2024, down from 0.9% in 2023, keeping consumer price inflation at historically low levels.
The Ministry of Economy expects inflation to remain moderate, monitored through the Governorates Competitiveness Index, which tracks regional price changes and market dynamics. This index supports policy decisions aimed at reducing economic disparities and ensuring market stability.
Oman’s commitment to social spending on healthcare, education and housing has played a significant role in stabilising living standards despite global financial challenges. Social initiatives launched during the pandemic helped vulnerable groups and maintained essential services even amid declining oil revenues.
The IMF projects global inflation to drop to 5.8% in 2024, reflecting central banks' efforts to curb inflation. As a result, the IMF lowered its inflation forecast for 2025 from 4.4% to 3.5%, indicating a positive economic outlook in the coming years. — ONA
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