When inflation falls, prices do not necessarily fall with it. Lower inflation simply means prices are rising more slowly; household grocery bills, transport costs and other everyday expenses do not automatically return to where they were a few years ago.
That may partly explain the gap between relatively benign national inflation figures and the unease heard in everyday conversations about household budgets.
Figures from the National Centre for Statistics and Information show average inflation was 0.6 per cent in 2024 and 1.0 per cent in 2025. The Centre's Consumer Price Inflation Report for July 2026, published on August 13, showed prices 3.2 per cent higher than in July 2025. Separately, average inflation over the first seven months of 2026 stood at 2.9 per cent. Food and beverages rose 7.3 per cent year-on-year and transport 6.5 per cent.
These figures do not establish a cost-of-living crisis and one month's food inflation should not be extrapolated indefinitely. But taken together with the trend since 2024, they justify a more useful question than simply asking whether salaries should rise: has household purchasing power kept pace with the economy around it?
That question is particularly relevant to the cost-of-living allowance paid to Omani civilian government employees. Under the unified salary schedule introduced by Royal Decree 78/2013, which took effect on January 1, 2014, the allowance ranges from RO 50 to RO 100 a month, with larger amounts assigned to lower grades. The logic was straightforward: the same rise in essential expenditure weighs more heavily on a lower income than a higher one.
More than 12 years later, there is nothing unreasonable about asking whether that structure still performs its intended function. That is not the same as demanding a general salary increase — and there are strong arguments against one.
A government pay rise is not a one-off cost. It becomes recurrent expenditure, year after year. Granted broadly, it also directs public money towards higher earners with considerably less need for cost-of-living support. It could widen the public-private sector wage gap at a time when Oman is trying to make private employment more attractive to nationals. And if additional income raises demand faster than the supply of goods and services, part of its benefit can be absorbed by higher prices.
These are not objections to brush aside. Oman's 2026 Budget estimates revenue of RO 11.447 billion against expenditure of RO 11.977 billion, a projected deficit of RO 530 million, based on an oil price of $60 a barrel. The IMF's 2025 Article IV Consultation, published on January 15, 2026, noted that fiscal adjustment under the budget was expected to be supported partly by restrained spending on wages, energy subsidies and capital expenditure, while identifying the narrowing of the public-private sector wage gap as a labour-market priority. The Fund also said Oman retained some fiscal space for temporary, targeted support if adverse shocks materialised.
Nothing in the IMF's assessment argues against reviewing the cost-of-living allowance. But any change should be weighed against both considerations: continued restraint on the wage bill and the goal of narrowing the public-private sector wage gap. A targeted, progressive adjustment would sit more comfortably within that space than a broad increase.
The debate has already reached the formal policy arena. On June 29, 2026, the Majlis Ash'shura heard an Urgent Statement on Enhancing the Cost of Living Allowance from Sultan bin Humaid al Hosni, a Majlis Ash'shura member representing the Wilayat of Al Khabourah. The statement linked the issue to geopolitical and economic developments affecting international trade, supply chains, shipping and household costs.
That should not automatically lead to an increase. It should lead to a calculation.
Oman now has better economic data, a more developed social-protection system and stronger public-finance institutions than when the present salary structure was introduced. Those tools could support a proper purchasing-power review: how essential household expenditure has changed since 2014; how wages and other income have evolved; which income groups face the greatest pressure; and what different policy responses would cost.
Such a review would not have a predetermined outcome. It might find the allowance remains adequate and that pressure is better addressed through targeted social protection. It might find that only the lower grades need adjustment. It might conclude the mechanism should be reviewed periodically rather than increased automatically. Or it might find that another policy offers better value for public money. What would be difficult to justify is assuming, without measurement, that a mechanism designed more than a decade ago remains optimally calibrated today.
There is a broader point here too. Much of Oman's recent economic effort has focused on repairing the state's balance sheet — reducing vulnerabilities, strengthening revenue, controlling expenditure. That progress matters and preserving it is essential.
But reform also interacts with a second balance sheet: the household's. Purchasing power affects more than personal welfare; it shapes consumer confidence, retail demand and the small businesses that depend on both. If real incomes weaken for a sustained period, the effects eventually reach the wider non-oil economy.
None of this means converting every fiscal improvement into higher salaries, or letting temporary oil revenue fund permanent wage commitments — that would recreate the vulnerability Oman has worked to reduce. The better principle is more demanding: protect fiscal sustainability while periodically testing whether the policies meant to protect household purchasing power are still doing their job.
That makes the real question narrower than whether Oman can afford to raise salaries. It is whether, after more than 12 years, there is enough evidence to justify reviewing the cost-of-living allowance — particularly for those at the lower end of the income scale. A review would not promise an increase. It would establish whether one is warranted. On an issue now before Oman's public institutions, evidence is a better starting point than either expectation or refusal.
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