KARACHI: House rent contributed the most to inflation in June, reflecting the grave situation prevailing in the housing sector, according to the Inflation Monitor issued recently by the State Bank of Pakistan (SBP).

The housing situation has only worsened as property prices skyrocketed in the last five years. Costly housing units have also led to higher rent. As a result, many people are forced to move into illegal housing built mostly on unauthorised land. The weighted contribution of house rent to inflation was 32.76 per cent in June. House rent increased throughout 2016-17 as reflected by 6.94pc inflation in June.

The second highest weighted contribution to CPI was by education, which remained 11.93pc. Inflation for education in June was 10.98pc against 7.38pc in the same month a year ago. Data shows that respective inflation recorded by housing and education was notably higher than the overall annual inflation of 4.2pc.

Drug medicine showed the highest ‘irreversible’ inflation of 20.3pc in June. This is called irreversible because drug prices rarely come down after registering an increase. Drug prices are going up also because of insufficient production of life-saving drugs in the country.

The SBP report said inflation for motor fuel was 8.92pc in June. Higher fuel costs hurt the entire economy. Fuel inflation showed a decline of 12.26pc in the same month of the last fiscal year.

Rice, which is exported in a vast quantity, did not witness a price decline in 2016-17 unlike the preceding fiscal year when it came down 10.8pc. Rice registered inflation of 13.95pc in June.

Wheat flour was the only commonly used product that noted a price decrease of 0.33pc in June.

The Inflation Monitor showed the non-food group caused higher inflation than the food group. “The weighted contribution of non-food group increased to 75.08pc in June from 59.54pc in the previous month,” said the SBP report.

The weighted contribution of the food group to overall inflation decreased to 24.92pc in June from 40.46pc in the previous month. It was 29.29pc in June 2016.

Published in Dawn, July 22nd, 2017