Lebanon’s deflation narrows to 1% y/y in June on Ramadan factor

By bne IntelliNews July 21, 2016

Lebanon’s CPI contracted just 1% y/y in June, narrowing from a 2.45% annual deflation in May, as prices rose during the fasting month of Ramadan, that ended on July 5, when private consumption expanded sharply, data from the statistics office CAS showed on July 21.

However, falling food, housing and transport prices, continue to weigh on the overall index with the IMF forecasting a CPI contraction of 0.7% in 2016.

In monthly terms, the CPI grew 0.7% in June, speeding up from a mere 0.1% m/m rise the preceding month.

Food and non-alcoholic beverage prices (20.6% of the basket) rose 0.3% m/m in June (down 2.4% m/m in May) on favourable seasonal factors and low import inflation. The annual deflation thus narrowed to 1% y/y from 3.2% in May.

Transport prices (13% of the basket) rose 1.2% m/m in June as the government upped fuel costs, cutting the annual decline to a still deep 6% from 6.3% y/y in May.

Housing charges (28.5% of the CPI index) rose 1.4% m/m in June but shrank 1.9% y/y compared with a 4.7% y/y contraction a month earlier, again on falling utilities charges (down 8.1% y/y). Rent costs rose 3.7% y/y in June, accelerating from 3% y/y in May.

Clothing and footwear charges rose 6% y/y despite falling 0.2% m/m in June. Strong local demand lifted the recreation prices by 2.5% y/y in June.

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