A supermarket in Hazmiyeh, Mount Lebanon. (Credit: Mario Doueiry)
The veneer of an economic rebound, reinforced by overflowing restaurants and beaches this summer, has overshadowed the reality faced by the majority of Lebanese struggling to make ends meet.
“There are no controls! The supermarkets are ripping us off!” said Dolly H., a mother of a large family who has been forced to shorten her shopping list in recent months.
Over the past four years, Lebanon has seen prices of consumer goods in lira soar by up to more than 270 percent year-on-year, according to the latest official figures.
The authorization granted to supermarkets in January allowing them to display prices in dollars has failed to reassure consumers.
Some believe prices have continued to rise since the beginning of summer, although the parallel market exchange rate has settled at around LL90,000 pounds to the dollar in recent months.
“The generally accepted idea that prices will stabilize once they are displayed in dollars is incorrect, as prices change according to a number of [international and local] factors,” said Hani Bohsali, president of the Syndicate of Importers of Foodstuffs in Lebanon.
A daily ordeal
By the end of the month, shopping baskets are only half-full and wallets are completely empty. Families are left in shock at the increase in their supermarket spending.
Nour Jammoul, a 26-year-old woman living alone in Beirut, estimated that her monthly budget increased by “$80 to $100” in recent months, and that the $250 she sets aside for herself is now far from enough to survive.
“Meat, chicken, fish and dairy products have gone up considerably,” she said, adding that she always shops at the same supermarket. Jammoul has been “forced to give up some products that have become excessively expensive,” like cooking oil, Greek yogurt and cereals. “I’ve also swapped plant milk, which has become too expensive, for animal milk, which is more affordable,” she said.
Dolly H., a mother of four, can hardly recognize her life., Her husband is the sole provider of the family and they try to live off $300 dollars a month. She has had to make major sacrifices and give up all that is not strictly necessary.
“The usual treats for children, such as crisps and chocolate, are now banned. Crisps have been replaced by homemade popcorn and chocolate has been replaced by more affordable biscuits. Industrial cold meats and cheeses have also been removed from our shopping list, replaced by white cheese or labneh that I make myself at home,” she said.
Dolly has also had to make concessions on the quality of essential products like diapers for her youngest daughter, who suffers from a disability. “My husband now buys them from Arcenciel [a charity],” she said.
Prices tend to change from one store to another, as L’Orient-Le Jour observed by comparing prices of around 20 products as charged by six supermarkets and small shops around the capital.
The differences between supermarkets generally hit a maximum of $1 to $2 per item.
Meanwhile, salaries are not keeping pace with inflation. Prices on the other hand, are back to how they were before 2019, before the crisis broke out, noted Nassib Ghobril, head of Byblos Bank’s research department.
The impact of taxes
When contacted, supermarket’s acknowledged rising prices, but denied any over pricing. According to the president of the union of supermarket owners Nabil Fahed, supermarket prices vary according to two main criteria: tariffs imposed by suppliers and operational costs.
The fact that Lebanon imports most of what it consumes does not help. Among the factors affecting suppliers, Fahed cited inflation in the countries where Lebanese importers source their goods, the rise in maritime insurance costs and the recent increase in customs duties and taxes imposed by the caretaker government.
Since the 2022 budget came into force in November, the exchange rate used to calculate customs duties and VAT has been raised several times, moving away from the former official parity of LL1,507.5 to the dollar and closer to the market rate.
“I think this is the most significant factor,” said Fahed, noting that there is a “two to three months” delay between the time an external event impacts prices at source and the Lebanese market.
Bohsali suggested that in recent months, traders sold off all goods purchased when VAT was at its lowest, and replaced them after the tax increased, hence the recent rise in prices.
Increases in the electricity bills of businesses, especially those that use their own generators to make up for EDL’s power cuts, are another factor. This has been exacerbated by the rise in diesel prices, which rose over 25 percent in the last three months alone, and by the fact that generators have been running at full capacity to power air conditioners during this particularly hot summer.
Finally, the way margins are calculated and their impact on prices can vary completely from one chain to another, said Bohsali. Fahed said supermarket margins have not changed in recent months and are therefore not the cause of rising prices.
“They have even fallen slightly, as supermarkets have been competing fiercely with each other to attract the customers who arrived this summer,” Fahed said.
Inflationary pressures ahead
For the time being, the situation will not likely improve. At global level, the inflationary pressures weighing on industrialized countries are set to continue, according to Christine Lagarde, President of the European Central Bank, who spoke on the subject at the end of last week.
Fahed also explained that “food prices in the near future will be determined by the outcome of the grain export agreement between Ukraine and Russia, which is influencing grain and cooking oil prices in our region.”
He added that the prices of some commodities, such as olive oil, are likely to soar as a result of the impact of climate change on the harvests of Mediterranean producers. He also spoke about rice, the price of which could rise since the Indian government decided in July to ban exports of non-basmati white rice.
Prices in Lebanon are also dependent on the new tax measures that Parliament may pass in the delayed 2023 budget, and the 2024 budget that is underway. In addition to measures relating to VAT and customs duties, the 2022 budget considerably increased taxes levied on salaries, forcing companies operating in Lebanon to review their strategy.
Nassib Ghobril said the Lebanese cabinet has so far failed to implement measures needed to curb inflation, including fiscal policy choices like reducing public spending, as recommended by the International Monetary Fund, among other things.
This article was originally published in French in L'Orient-Le Jour. Translation by Joelle El Khoury.