According to the Central Administration of Statistics (CAS), the Consumer Price Index (CPI), representing the evolution of goods and services’ prices consumed by households, revealed that Lebanon’s inflation rate remained at high levels as it recorded a yearly 51.59% by May 2024, though less than the rates of 2020 – 2023 mainly due to the stability of the exchange rate at the parallel market especially since August 2023 upon the start of the reign of the acting governor of BDL Mr. Wassim Mansouri. Meanwhile, the continued escalating political and military tensions in the Middle East and its effect on Red Sea with no resolution seen in the near future pose a significant threat for the shipping companies whose ships pass through Bab el Mandeb Strait, a vital global maritime passageway. Such an occurrence is causing supply chain disruptions, an upturn in shipping costs, and consequently, elevated consumer prices. The implications of these developments may result in a broader surge in inflation. As for Lebanon, already struggling with the political and economic challenges causing persistent high inflation since late 2019, it would encounter heightened difficulties in preserving price stability amid prolonged economic uncertainty.
In details, it is worthwhile to note that Education (6.6% of CPI) increased by 589.23% YOY. Also, the cost of “Housing and utilities”, inclusive of water, electricity, gas and other fuels (grasping 28.4% of the CPI) added a yearly 63.32% by May 2024. Similarly, “Owner-occupied” rental costs increased by 72.39% year-on-year (YOY) and the prices of “water, electricity, gas, and other fuels” followed an increase by 55.18% YOY.
Looking at the prices of “Food and non-alcoholic beverages” (20% of CPI), it surged by 31.67% yearly. In turn, the average prices of “Transportation” (13.1% of the CPI) and “Health” (7.7% of the CPI) recorded hikes of an annual 10.02% and 46.79% respectively by May 2024. Also, “Restaurant and Hotels” (2.8% of CPI) increased yearly by 23.49% by May 2024.
Concurrently, costs of “Clothing and Footwear” (5.2% of CPI) surged by 25.65% by May 2024, and the prices of “Communication” (4.5% of the CPI) increased by 31.16%. Prices of “Furnishings and household equipment” (3.8% of CPI) declined by 6.52% year-on-year, while prices of “Alcoholic beverages and tobacco” (1.4% of CPI), and “Recreation, amusement, and culture” (2.4% of the CPI) increased by 19.3%, and 50.86%, respectively, by May 2024.
There are a couple of points that are interesting to note. First, the monthly inflation between April 2024 and May 2024 stood at 0.02%. Second, four out of the six governorates experienced a decrease in inflation between April 2024 and May 2024 being 1.47% decrease in Beirut, 2.66% decline in North Lebanon, 1.06% drop in Bekaa, and 3.04% reduction in Nabatieh. On the other hand, two governorates witnessed an increase in inflation between April 2024 and May 2024 being 1.83% increase in Mount Lebanon and 0.27% rise in South Lebanon.
Inflation Rate by May 2024
Source: CAS, BLOMINVEST
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