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Inflation

Consumer prices double year-on-year as Lebanon’s economic crisis deepens

Consumer prices double year-on-year as Lebanon’s economic crisis deepens

Transportation costs nearly tripled from June 2020 till June 2021, according to the Central Administration of Statistics, partly reflecting higher prices at the pump. (Credit: Philippe Hage Boutros/OLJ)

BEIRUT — Consumer prices doubled from June 2020 to June 2021, according to the latest figures published by Lebanon’s Central Administration of Statistics, a government agency.

The consumer price index, or CPI, which measures inflation by computing the change in prices of a weighted basket of goods and services over a period of time, was 100.64 percent higher in June 2021 than the year prior. It was the 12th month straight that the CPI has registered triple digit annual growth. A 100 percent rise is equivalent to a doubling of prices.

Inflation was 89.74 percent between June 2019–20, meaning that over the past two years, consumer prices have nearly quadrupled.

With inflation just 1.69 percent the year prior, the shocking price hikes coincide with the country’s disastrous financial crisis, which began in the second half of 2019, when foreign currency inflows faltered and the national currency began to deviate from its longstanding peg of LL1,507.5 to the US dollar. The lira has lost more than 90 percent of its value since.

In June, the national currency traded at an average price of LL15,280 per dollar on the parallel market.

With the summer tourist season starting and the Lebanese diaspora returning home from abroad on vacation, prices at restaurants and hotels grew by about 237 percent year-on-year in June, registering the highest inflation figure in the monthly report.

Prices of food and non-alcoholic beverages rose by about 222 percent, the CAS report stated, while those of alcoholic beverages and tobacco increased by around 180 percent.

The cost of furnishings, household equipment and routine household maintenance — a key indicator for those whose homes were damaged in the massive Aug. 4, 2020, Beirut port explosion — was 196 percent higher in June 2021 compared to a year prior, CAS said.

Meanwhile, transportation expenses grew by 195.44 percent, following both the rise in global fuel prices and Banque du Liban’s partial removal of fuel subsidies. On June 25, the central bank started fully financing fuel imports at an exchange rate of LL3,900 per greenback instead of covering 90 percent of the cost of imports at the official LL1,507.5 peg.

Water supply, electricity, gas and other fuel expenses rose by 102.86 percent, despite being subsidized by the central bank. As the amount of power supplied by state utility Électricité du Liban has fallen to less than six hours per day in most areas, many residents have turned to pricier private generators.

Meanwhile, the cost of clothing and footwear grew by 172 percent.

In sectors with greater price controls, inflation lagged. In the communications sector, which is largely state-run, expenses rose by 34.6 percent.

Meanwhile, inflation in the education and health care sectors remained relatively low compared to other sectors, rising by 10.54 percent and 21.45 percent, respectively.

However, the relatively modest price increases in these sectors have had other knock-on effects: teachers and health care personnel, many of whose salaries require political approval to be adjusted, have gone on strike on several occasions this year in protest as stagnant salaries cover fewer and fewer expenses.

With the Health Ministry partially removing subsidies on more than 1,500 imported and locally manufactured drug products in mid-July, the inflation rate for health care is expected to rise in July’s report.


BEIRUT — Consumer prices doubled from June 2020 to June 2021, according to the latest figures published by Lebanon’s Central Administration of Statistics, a government agency.The consumer price index, or CPI, which measures inflation by computing the change in prices of a weighted basket of goods and services over a period of time, was 100.64 percent higher in June 2021 than the year prior....