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 jumped from 145.8% in December 2020 to register a record high of 224.39% in December 2021.
In more details, the average inflation rate by December 2021 reached 149.65%, higher than the average inflation rate of 84.27% over the same period 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 103.08% by December 2021, where “Owner-occupied” rental costs increased by 2.81% year-on-year (YOY) while the average prices of “water, electricity, gas, and other fuels” soared by 425.35% YOY.
Looking at the prices of “Food and non-alcoholic beverages” (20% of CPI), it surged by 438.65% 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 522.39%, 404.94% and 414.71%, respectively, by December 2021.
In the same token, costs of “Clothing and Footwear” (5.2% of CPI) surged by 233.75% by December 2021, and the prices of “Communication” (4.5% of the CPI) increased by 36.17%.
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 243.73%, 295.20%, and 152.20%, respectively, by December 2021.
Undoubtedly, inflation skyrocketed amid the removal of fuel subsidies in September 2021 as the Central Bank is not capable anymore of subsidizing fuel imports due to the shrinking foreign currency reserves. Most importantly, we note that during this period, the exchange rate reached USD/LBP 33,000, reaching its highest level in the parallel market and reflecting the Lebanese exchange rate severe deterioration. However, now that the exchange rate has declined to around 21,000, it would be interesting what the inflation rate is going to be in the near future.
Inflation rate by December 2021
Source: Central Administration of Statistics, BlomInvest