The average rate of Oman’s actual inflation from 2021 to the end of 2024 was approximately 1.4 percent. This figure remained moderate and aligned with the 2.8 percent target established for the duration of the tenth five-year development plan spanning 2021 to 2025.
The Omani economy is continuing to expand at rates that surpass the average inflation figures. The actual average growth of the Gross Domestic Product (GDP) at constant prices was recorded at 3.9 percent between 2021 and 2023.
Public spending and budget allocations
The budget for the current fiscal year (2025) has seen an increase in public spending volume and a reinforcement of the contributions clause along with other expenditures. Within this budget, public spending was projected at around OMR11.800 billion, a rise from OMR11.650 billion in 2024.
The current budget included provisions for the social protection scheme amounting to roughly OMR577 million. Additionally, OMR73 million was designated to subsidize the interests of “development and housing loans,” OMR520 million was allocated to support the electricity sector, OMR194 million for the water and wastewater sector, and OMR216 million for supporting petroleum products, food commodities, the transport sector, the waste sector, and various other sectors.
Read more: Oman launches electronic system for issuing securities (E-IPO) to enhance transparency in financial transactions
Monetary policy and interest rates
Also, regarding the monetary policy of the Sultanate of Oman, with the Omani Rial pegged to the U.S. Dollar, the Central Bank of Oman (CBO) has been diligent in aligning with the decisions of the U.S. Federal Reserve concerning bank interest rates. The primary objective is to maintain equilibrium between liquidity supply and demand while curbing the inflation rate’s ascent.
In alignment with a shift towards monetary easing following a decrease in the inflation rate, the CBO reduced the interest rate on repurchase operations for local banks throughout 2024, ultimately lowering the interest rate to 5.00 percent by the end of 2024.
The Ministry of Economy further clarified that the annual inflation data reflects a persistent decline in the inflation rate in Oman based on the consumer price index in the Sultanate of Oman. The average annual inflation rate stood at approximately 0.60 percent during the period from January to December 2024, contrasting with about 0.94 percent during the same timeframe in 2023.
