Thursday 25 / April / 2024
Muscat: Consumers and retailers say that a rise in the cost of living, fuelled largely by the increase in the price of petrol at the pumps, is hitting spending, with shoppers watching their wallets.
Read also: ‘Inflation significantly affected our business in Oman’
Times of Oman reported yesterday how the latest government data recorded a year-on-year inflation rate rise of 1.33 per cent in September 2016, based on the consumer price index, and mainly driven by a 6.57 per cent rise in prices in the transport sub-segment, and a 0.77 per cent rise in housing, water, electricity, gas and other fuels.
“We are witnessing a change in purchase patterns. People are coming to our hypermarkets with a proper plan on what to buy and (what) not to. We can see that they are avoiding the purchase of pricey unnecessary items, for the time being,” A V Ananth, director Lulu Oman and India, told Times of Oman.
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“Availability of local items at affordable prices is cushioning the inflation effect, however, we can say that there is an impact in sales of pricey items, to an extent,” Ananth added.
Further, P. Chandrasekhar, Group General Manager at Jawad Sultan Group, said that the demand for niche and exclusive items in the market has dipped in recent months.
“As prices are going up, people are reluctant to buy niche and exclusive items, which can destabilise their monthly budgets,” said Chandrasekhar, who is also a financial analyst.
“People used to buy all kinds of items in the past. Now, they have become price cautious,” Chandrakeshar added.
The government report says that furnishings, household equipment and routine household maintenance went up 0.92 per cent. Healthcare costs increased 0.91 per cent, education registered a 3.03 per cent jump, restaurants and hotel prices were up by 0.37 per cent. Also, goods and a variety of services rose 0.4 per cent.
In contrast, prices for the group of foodstuff and non-alcoholic beverages came down 0.77 per cent, clothing and footwear fell 0.46 per cent, communications by 0.26 per cent, and culture and entertainment fell 0.48 per cent.
Gopal Purushotham, a banker in Muscat, said that low-income people were being hit by rising inflation.
“This situation is really a challenge. Day by day prices of provisions are going up. If your earning potential is not increasing, it is not at all well. However, as oil prices are going up, let’s be hopeful,” he added.
Aswathi Shibu, a homemaker, said that her family is always looking for offers when buying items for the household these days.
“Last week, we heard about offers in a hypermarket in Seeb. We were surprised to see a huge rush there. Even the escalator was stopped due to being overweight. We had to wait for more than two hours at the billing counter,” Aswathi recalled.
Kabeer CV, a distributor of vegetables to small grocery shops, said that such offers are affecting them. “People looking for offers cannot be blamed, because their economic condition is bad, and all are struggling,” he added.
The Sultanate’s petrol (Super Grade) price surged by some 50 per cent to 179 baisas per litre between mid-January and today, while diesel prices also showed a similar growth.
Starting in mid-January, the country has raised prices of refined petroleum products, which saved millions of rials in fuel subsidies.
The increase in diesel prices used by trucks for transportation, led to an increase in the cost of transporting essential goods.
Mohammed Faud, a national taxi driver in Ruwi, said that inflation has significantly affected his business.
“Fuel prices are up. We are not supposed to increase the fares. Prices of goods are going up. I don’t know, how I can adjust. It is quite difficult now. I have to think of my family, children’s education and medical expenses, too,” Mohammed added.
Meanwhile, Philip K Philip, group CEO of Muscat Insurance Company and Muscat Life Assurance Company, said that as a general principle, most economists favour low rates of inflation, as opposed to zero or below zero.
“Therefore, in my opinion, one shouldn’t be unduly worried about the minimal inflation rate. In real money terms, inflation due to healthcare costs could be occurring because of improved healthcare avenues and facilities. Increasing insurance penetration also could have influenced the current inflation (which will have a spiral effect on the spending, going forward),” Philip added.
Hashim Kutty, working in Oman since 1975, said that the cost of living has so far not been affected that seriously.
“However, there is a small impact. We have to cooperate for the economic development of Oman. It is not much, I think. So, I am satisfied. We don’t know how much it will go up or come down in the future. We have to adjust,” Hashim said, adding that inflation will have an impact uponearnings.
The hike in fuel prices has also affected the sales of large engine vehicles, as buyers prefer to purchase more economical options.
“We have had a significant drop in overall sales this year due to obvious reasons, however, the large vehicle market has been drasticallyaffected,” a sales manager of a leading brand in Oman said.
“The most common question people are asking us is about the fuel efficiency of vehicles. Even customers who are looking for bigger cars enquire about smaller engine variants,” he added.
NS Rajiv, managing director of a transport company that operates some 40 buses, said that the hike in fuel prices has had a significant effect on his company.
“We are in a fix. As I am operating buses for schools, I cannot increase the fees. Contracts are made on a yearly basis. I am suffering a loss of 10 to 15 per cent every month,” Rajiv said.
“While operational costs are going up and revenue is coming down, we are affected,” Rajiv added. A local hotelier also said that local bookings are falling, as people are not willing to spend as in the past. “Some days we even don’t have one local booking. It is affecting our revenues. People are not coming to hotels like in the past,” the hotelier said, on condition of anonymity.
(With inputs from Gautam Viswnathan and Syed Haitham Hasan)
