According to the Central Administration of Statistics (CAS), the Consumer Price Index (CPI), which gives an overview about the evolution of goods and services’ prices consumed by households, revealed that Lebanon’s monthly inflation rate soared from 120% in August 2020 to reach a dramatic level of 137.75% in August 2021.
In more details, the average inflation rate by August 2021 reached 131.59%, higher than the average inflation rate of 58.01% over the first eight months in 2020. Accordingly, all sub-components of Lebanon’s consumer price index (CPI) increased over the studied period.
In turn, the cost of “Housing and utilities”, inclusive of water, electricity, gas and other fuels (grasping 28.4% of the CPI) added a yearly 47.42% by August 2021, where “Owner-occupied” rental costs increased by 4.39% year-on-year (YOY) while the average prices of “water, electricity, gas, and other fuels” increased by 137% YOY.
Looking at the prices of “Food and non-alcoholic beverages” (20% of CPI), it surged by 290.40% yearly. In turn, the average prices of “Transportation” (13.1% of the CPI), “Health” (7.7% of the CPI) and “Restaurant and Hotels” (2.8% of CPI) all recorded hikes of an annual 290.55%, 206.47% and 281.80%, respectively, by August 2021.
We also note that the costs of “Clothing and Footwear” (5.2% of CPI) surged by 205.53% by August 2021, and the prices of “Communication” (4.5% of the CPI) increased by 33.94%.
Worth mentioning, prices of “Furnishings and household equipment” (3.8% of CPI), “Alcoholic beverages and tobacco” (1.4% of CPI), and “Recreation, amusement, and culture” (2.4% of the CPI) increased by 147.55%, 197.06%, and 115.06%, respectively, by August 2021.
Moreover, actions of reducing subsidies have started in recent months, as most items are now priced at the parallel market exchange rate, adding to inflationary pressures. The central bank is running out of cash after it had repeatedly warned the government about continuing with the subsidies. As such, comprehensive reforms including bank restructuring, are critically needed in order to get international support, especially with the removal of subsidies on fuel and petroleum products.
Inflation rate by August 2021
sources; CAS, BLOMINVEST