Inflation was 5.3 percent in August. On a monthly basis, consumer prices fell 0.3 percent in September after a 1.4 percent rise in the previous month, data from the country's Economy Ministry showed. 

The ministry said the prices of personal items, which include jewelry, slid 8.4 percent from a month earlier because of a 14.7 percent drop in the price of gold. Oman, like other Gulf countries, sometimes sees sharp variations of its consumer basket components which impact monthly inflation figures. 

"The general inflation trend in Oman is however downward, driven by a strengthening of the dollar and lower international commodity prices," said Fabio Scacciavillani, chief economist at Oman Investment Fund in Muscat.  

Nancy Fahim, economist at Standard Chartered in Dubai, said: "We're seeing lower month-on-month inflation figures for September, as the Ramadan effect wears off." She was referring to a burst of consumer demand related to the Muslim holy month.

"Oman's headline inflation rate for the year so far is moderate, although on the upper end of the scale for the Gulf Cooperation Council (GCC)." 

Analysts polled by Reuters in September predicted average inflation in Oman of 3.9 percent in 2011 and 2012, after 3.3 percent in 2010.

Rents and energy in Oman, which account for 21.4 percent of the sultanate's consumer basket, rose 0.2 percent month-on-month in September after a 0.4 percent increase in the previous month. 

But food prices, which make up more than 30 percent of the basket, were up 1.3 percent month-on-month in September after a 0.8 percent rise in August. 

The sultanate's economy is expected to expand 4.0 percent this year and 4.2 percent in 2012, helped by the government's increased infrastructure spending, the Reuters poll found. 

Central Bank Executive President Hamood Sangour Al-Zadjali said in November he was not worried about inflation at the moment, but that the central bank would watch it very closely. He forecast in October inflation would reach 4 percent in 2011, while the economy was likely to grow 5 percent.