Factors affecting inflation rate Oman - Assignment Example

21.54964 6.704981 2.19058 4.2857 8.11088 11.538462 2.801932367 14.6666667     Formula: Current year - Previous Year/Previous year*100       From the above table it could be understood that the perspective of Oman inflation rate in the consecutive years has taken a leap from 2000 onwards. Starting from 2002 it can be seen that consumer price index has varied with some consistent rates of inflation. Starting from 2002 till 2008, there was constant price growth in certain sectors, which has made Oman’s inflationary conditions more severe than any other Middle East countries.

Here we can see that there is a persistent inflation in food beverages and tobacco sector from 2002 to 2008 e.g. 0.10 to 21.54 inflation rate. This may be owing to supply bottlenecks and increase in demand. In case of education, recreation and entertainment deflation has taken place from 2003-2005 i.e. -0.79 to -0.10 but again from 2006 onwards growth in price level has been observed, this certain fluctuation has occurred due to change in educational demand of the country. In the initial years of 2000 Oman faced minimum growth in medical care due to non availability of proper medical facility and high expense.

This is reflected in the change in rate of price change from negative to positive. But it has shown growth later on with response to the factors demanding for health and care of the country and this is again reflected in the slowdown of inflation rate after 2003. Then comes the most important consumer goods clothing and footwear sector where again a fluctuation in the CPI growth rate can be traced in the years 2002-2003 and again in 2006 but in later part it has increased. The manufacturing sector overall showed marked improvement and this might have generated more demand which in turn brought in inflation.

In case of housing furniture and rent electricity water and fuel a huge deflation has been observed in the years 2002-2004 consecutively. In both the sectors there was a downfall because at that time there was no change in the market condition for these years and in 2005 there was ‘0’ growth rate in price. But after that gradually it started taking up its position by severe improvement in the economy of the country. Sometimes growth in a sector can momentarily bring about inflation. The transport and communication sector is though highly developed in Oman with proper facility of road, airport, ports and railway has more or less consistent inflation in the following years except on 2003 when it came down to -0.50. The Government of Oman have made a total investments for major infrastructure projects estimated to be R.O. 15 billion between