According to the Central Administration of Statistics (CAS), the monthly inflation rate in Lebanon surged to 11.4% in February 2020, up from 3.15% in Feb. 2019. The ensuing inflation rate in the first two months of 2020 surged to 10.7%, up from 3.16% recorded by February 2019.
All sub-components of Lebanon’s consumer price index (CPI) recorded substantial upticks in the first 2 months of the year. In details, the average costs of “Housing and utilities”, inclusive of water, electricity, gas and other fuels (composing 28.4% of CPI) climbed by 3.5% year-on-year (YOY) by February 2020. In fact, “Owner-occupied” rental costs (composing 13.6% of Housing and utilities) rose by an annual 2.7% while the average prices of “water, electricity, gas, and other fuels” (11.8% of Housing & utilities) recorded a substantial increase of 4.4%YOY, over the same period. In addition, average prices of “Food and non-alcoholic beverages” (20% of CPI) surged by 17.1% by February 2020. As for the average price of “Transportation” (13.1% of the CPI), it rose by 18% despite the annual 3.95% drop in the average international oil prices to $59.77/barrel by February 2020.
Moreover, the average costs of “Education” (grasping 6.6% of CPI) rose by 4%YOY while average prices of “Clothing and Footwear” (5.2% of CPI) surged by 27.5%YOY by February 2020. In addition, the average costs of “Health” (7.7% of the CPI) increased by a marginal 0.6%YOY over the same period.
The inflation rate is expected to rise further in the upcoming months (March April and May). In fact, the Lebanese pound accelerated its depreciation and reached unprecedented levels against the dollar during this period. However, worth mentioning that on May 27, 2020, the central bank issued two separate Circulars, Nos. 556 and 557, providing commercial banks with foreign currency to finance the imports of raw material for industry and the imports of basic food and the raw material for the agro-food industry. These measures are expected to put a lid on the rise of related prices, especially those of food products.