Lebanon's consumer prices driven down by telecoms cuts

Year-on-year, consumer prices were up 2.5 percent in June. (The Daily Star/Mohammad Azakir)

BEIRUT: Lebanon’s consumer prices fell drastically in June, erasing over half of the inflation recorded since the beginning of the year, driven by telecoms price cuts instituted over the last two months.

The Central Administration of Statistics’ June CPI, published Monday, showed a 0.7 percent decline in prices between May and June, putting 2014 inflation at 0.61 percent.

The June results follow a 0.3 percent drop in May, for a drop of 1 percent in consumer prices over the last two months.

The drop in consumer prices was driven by telecoms rate cuts. The telecoms sector of the CPI dropped by 20.9 percent between May and June. While telecoms are only weighted at 4.6 percent of the total CPI, this drop was large enough to lower the overall index by .96 percent, which means that without the telecoms rate cuts, Lebanon would have witnessed inflation in June.

Telecommunications Minister Boutros Harb has ordered steep price cuts across a range of communication services in Lebanon since taking office in February. The price of calls was lowered in May, while new land line and mobile phone Internet plans officially went into effect July 1, though some companies began charging the new rates in June.

The drop in the telecoms prices was offset by a 1.8 percent increase in the utilities component of the CPI. This includes water, electricity and gas costs. Lebanon is witnessing a drought, with many consumers increasingly forced to rely on private water suppliers as the public utilities are rationing.

Across the other components of the CPI, the largest movements in June were clothing and footwear, which dropped 1.9 percent; food and non-alcoholic beverages, which dropped 0.6 percent; and the recreation component, which rose 0.6 percent.

The regional subindexes all recorded a drop in prices in June, led by the Bekaa at 0.7 percent, Nabatieh at 0.6 percent and Beirut at 0.5 percent.

Year-on-year, the CPI was up 2.5 percent in June. June’s results are the first in five months to include an annual result, as the government did not collect statistics from January-May 2013.

Communication prices are down 21.2 percent compared with June 2013, while all other components of the CPI have risen in that time. Alcohol and tobacco led the increases, at 12.5 percent, education at 7.1 percent and clothing at 6.3 percent.





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