The latest inflation rate for Oman (OM) rose to 1.50% YoY in November 2025, according to the Sigmanomics database. This figure exceeds the market consensus estimate of 1.30% and last month’s 1.10%, signaling a clear upward trend in consumer prices. Over the past 12 months, inflation averaged approximately 0.80%, underscoring the recent acceleration. This shift reflects a combination of rising energy costs, supply chain constraints, and increased domestic demand.

Drivers this month

• Energy prices contributed 0.40 percentage points (pp) to inflation.
• Food and beverages added 0.30 pp, reflecting global commodity price pressures.
• Housing and utilities rose by 0.20 pp, driven by higher rental costs.
• Transport costs increased by 0.15 pp amid fuel price volatility.
• Used cars and durable goods showed minimal impact (-0.05 pp).

Policy pulse

Oman’s inflation rate remains below the Gulf Cooperation Council (GCC) average but is trending closer to the Central Bank’s implicit target range of 2%. Monetary policy remains accommodative, with the benchmark interest rate steady at 3.50%. However, the upward inflation trajectory may prompt tighter financial conditions if sustained.

Market lens

Following the inflation release, the OMR/USD exchange rate strengthened modestly by 0.10%, reflecting confidence in Oman’s macro stability. Short-term government bond yields rose by 5 basis points, while breakeven inflation rates edged higher, signaling market anticipation of gradual monetary tightening.

Oman’s inflation dynamics must be viewed alongside core macroeconomic indicators. GDP growth for Q3 2025 was reported at 3.20% YoY, supported by oil sector recovery and non-oil diversification. Unemployment remains low at 3.80%, sustaining consumer spending power. The fiscal deficit narrowed to 2.10% of GDP in Q3, aided by higher oil revenues and controlled public spending.

Monetary Policy & Financial Conditions

The Central Bank of Oman maintains a neutral stance, balancing inflation risks with growth support. Liquidity remains ample, with credit growth at 6.50% YoY. Inflation expectations have risen slightly but remain anchored below 2%. The OMR’s peg to the USD limits exchange rate flexibility but ensures external stability.

Fiscal Policy & Government Budget

Fiscal policy remains prudent. The government’s 2025 budget projects a 3.50% GDP deficit, down from 5% in 2024, reflecting improved oil prices and expenditure discipline. Public investment in infrastructure and economic diversification continues, supporting medium-term growth and inflation moderation.

External Shocks & Geopolitical Risks

Oman faces external risks from regional geopolitical tensions and oil price volatility. Recent OPEC+ production adjustments have kept Brent crude prices near $85/barrel, supporting fiscal revenues but also feeding into domestic inflation. Global supply chain disruptions persist, particularly in food and raw materials, adding upward pressure on prices.

Compared to historical readings, the current inflation rate is still moderate relative to the 2019 peak of 3.20% but signals a clear break from the low-inflation environment of mid-2025. The chart below illustrates the steady climb since September 2025, highlighting the recent inflationary pressures.

Market lens

Immediate reaction: The OMR/USD exchange rate appreciated 0.10% within the first hour post-release. Short-term yields on Oman’s sovereign bonds rose by 5 basis points, reflecting increased inflation risk premiums. Breakeven inflation rates climbed 10 basis points, signaling market expectations of moderate inflation persistence.

Looking ahead, Oman’s inflation trajectory depends on several key factors. The base case scenario (60% probability) forecasts inflation stabilizing around 1.50%-1.70% over the next six months, supported by steady oil prices and moderate demand growth. The Central Bank is expected to maintain a cautious stance, possibly signaling gradual rate hikes if inflation remains elevated.

Bullish scenario (20% probability)

• Oil prices stabilize above $90/barrel, boosting fiscal revenues and domestic demand.
• Supply chain bottlenecks ease, containing food and commodity price pressures.
• Inflation moderates to below 1.30%, allowing accommodative monetary policy to continue.

Bearish scenario (20% probability)

• Geopolitical tensions escalate, disrupting oil supply and pushing prices above $100/barrel.
• Global inflationary pressures intensify, spilling over into Oman’s import prices.
• Inflation accelerates above 2.50%, forcing aggressive monetary tightening and weighing on growth.

Risks remain balanced but tilted slightly to the upside given external uncertainties. Fiscal prudence and ongoing economic diversification efforts provide buffers against inflation shocks.

Oman’s inflation rate of 1.50% YoY in November 2025 signals a notable shift from the subdued inflation environment earlier this year. While still moderate by regional standards, the acceleration reflects rising energy and food costs amid global supply chain challenges. Monetary policy remains accommodative but faces pressure to respond if inflation persists above target. Fiscal discipline and external stability remain key to managing inflation risks. Market reactions suggest confidence in Oman’s macro framework but highlight sensitivity to inflation surprises.

Structural trends, including economic diversification and controlled public spending, support medium-term inflation moderation. However, external shocks and geopolitical risks require vigilance. Policymakers should prepare for a range of scenarios, balancing growth and price stability objectives.

In sum, Oman’s inflation outlook is cautiously optimistic but demands close monitoring of global commodity markets and domestic demand conditions.

Oman’s inflation data typically influences several key markets, including local currency, sovereign bonds, and regional equities. The following tradable symbols have shown historical sensitivity to inflation trends in Oman:

• OMRUSD – Oman Rial to US Dollar exchange rate, sensitive to inflation and monetary policy shifts.
• OMAN – Oman stock market index, reflecting investor sentiment on economic growth and inflation.
• ADNOCDIST – ADNOC Distribution stock, linked to energy sector performance and inflation-driven fuel prices.
• BTCUSD – Bitcoin, often viewed as an inflation hedge and alternative asset.
• USDINR – US Dollar to Indian Rupee, relevant due to trade and remittance flows affecting inflation.

A comparative analysis of Oman’s inflation rate and the OMRUSD exchange rate since 2020 reveals a generally inverse relationship. Periods of rising inflation often coincide with modest OMR appreciation, reflecting monetary policy responses and external capital flows. For example, the inflation uptick in late 2025 corresponded with a 0.10% OMR strengthening post-release, indicating market confidence in Oman’s economic management despite inflationary pressures.

Selected Tradable Symbols

• OMRUSD – Oman Rial to US Dollar exchange rate, sensitive to inflation and monetary policy.
• OMAN – Oman stock market index, reflecting economic growth and inflation sentiment.
• ADNOCDIST – ADNOC Distribution stock, linked to energy prices impacting inflation.
• BTCUSD – Bitcoin, often considered an inflation hedge.
• USDINR – US Dollar to Indian Rupee, relevant due to trade and remittance flows affecting inflation.

Sources

1. Sigmanomics database, Inflation Rate YoY for Oman, November 2025 release.
2. Central Bank of Oman, Monetary Policy Reports, 2025.
3. Oman Ministry of Finance, Fiscal Data Q3 2025.
4. OPEC Monthly Oil Market Report, November 2025.
5. International Monetary Fund, Regional Economic Outlook, 2025.