According to the Central Administration of Statistics (CAS), the consumer price index (CPI) registered a 3.26% yearly fall to 98.02 in the first 5 months of the year compared, to last year’s 101.32. This deflationary pressure was mainly attributed to three factors, the first of which is the approximate 45.16% year-on-year (y-o-y) tumble in international oil prices by May 2015. The second factor is the average 15.75% depreciation of the Euro vs the dollar, over the same period, considering that the major part of Lebanon’s imports are from Europe. Finally, the fall in communication prices since June 2014 following the implementation of lower mobile tariffs, has held back prices as well. Since “water, electricity, gas & other fuels”, “transportation” and “communication” constitute three of the major weights in the CPI, with a cumulative share of 30%, it’s expected that overall prices should downturn because of the above mentioned reasons. Even though, prices have been increasing month-on-month for last four months by an average of 0.92%, the CPI still experienced a year-to-date drop of 1.28%.
In terms of the CPI’s components, “food and non-alcoholic beverages” (20.6% of CPI) decreased by 0.34% y-o-y by May 2015. Moreover, Transportation (13.1% of CPI) and “water, electricity, gas & other fuels” (11.9% of CPI), witnessed a yearly fall of 13.66% and 10.35%, respectively. The final 2 sub-indices that respectively waned were “health” (7.8% of CPI) and “communication” (4.6% of CPI), recording a 6.06% and 23.71% y-o-y decline over the same period. The former decline came about from the Ministry of Finance setting quotas on medicine prices slashing them by up to 30% as of April 2014.
However, “education” sub-index, constituting 4.50% of the CPI, augmented by 4.51% y-o-y by May 2015. Furthermore, clothing and footwear (5.4% of CPI) prices went up by an annual 5.09%. This rise might be due to higher tourist spending since the beginning of the year. In addition, “actual rent” sub-index for households (old and new rent), with a stake of 3.4% in the CPI, and “alcohol beverages & tobacco” (1.6% of CPI) up-ticked by an annual 10.20% and 4.81%, respectively, over the above mentioned period.
Yearly CPI Components Change by May
Source: CAS