Construction, utilities’ prices push inflation up

Updated August 04, 2019

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Amid rising gas and motor fuel costs, jump in newspaper prices have also increased CPI-based inflation, data published by the State Bank of Pakistan (SBP) showed on Saturday. — Reuters/File
Amid rising gas and motor fuel costs, jump in newspaper prices have also increased CPI-based inflation, data published by the State Bank of Pakistan (SBP) showed on Saturday. — Reuters/File

KARACHI: Amid rising gas and motor fuel costs, jump in newspaper prices have also increased CPI-based inflation, data published by the State Bank of Pakistan (SBP) showed on Saturday.

Inflation Monitor for June published by the SBP showed newspapers among the top ten leading contributors to inflation at 19.63pc in June (year-on-year basis) compared to 12.02pc in June 2018.

Highest contributor to the non-food inflation in June was the rising gas prices showing 85pc inflation from zero in June 2018 with its weighted contribution increasing to 10.55pc in June. The government has increased gas prices several times during the last fiscal year.

Motor fuel – another major contributor -- showed inflation of 24.9pc in June compared to 17.3pc in June 2018. The government has also increased motor fuel prices several times during the last fiscal year citing currency depreciation despite declining oil prices in the international market.

Motor fuel holds 3pc weight in the CPI non-food basket but its weighted contribution in June rose to 6.48pc.

Rising fuel costs had an amplifying effect across other segments of the economy.

Motor vehicle — sixth in the list of leading contributors to the inflation -- registered an inflation of 12.73pc in June against 6.67pc in June 2018. The weight of motor vehicles in the basket of goods was 0.66pc while the weighted contribution was 0.79pc.

The motor vehicle accessories also showed an inflation of 11.44pc in June compared to 2.2pc in 2018. The year-on-year change showed large increase in the prices of vehicle accessories while its weighted contribution was 0.3pc compared to 0.24pc in the CPI non-food basket.

Furthermore, construction inputs — another important segment — showed an inflation of 11.2pc against 8.5pc in June, 2018. The cost of construction has increased during the last fiscal year hampering the private sector to bring more housing projects. The rising costs have also affected PTI government’s efforts to build five million housing units across the country.

Inflation in the personal equipments segment was 13.74pc compared to 9.32pc in June 2018.

Headline CPI inflation has been increasing for more than a year reflected in both food and non-food sectors.

Published in Dawn, August 4th, 2019