Deflationary Pressures on the Lebanese Economy in H1 2015

According to the Central Administration of Statistics (CAS), the consumer price index (CPI) has been prone to deflationary pressures in H1 2015 compared to H1 2014. The CPI dropped from 100.61 in June 2014 to 97.22 in June of this year, registering a 3.37% year-on-year (y-o-y) drop.  Since “water, electricity, gas & other fuels” and “transportation” constitute two of the major weights in the CPI with a cumulative share of 25%, it’s expected that consumer prices will fall on the back of the approximate 45% yearly decline in the average international oil prices for June 2015. Furthermore, the appreciating dollar versus the Euro influenced the price decrease bearing in mind that a major part of Lebanon’s imports are from Europe. Worth mentioning that overall prices have also been decreasing year-to-date by 2.09%.

In terms of the CPI’s components, “Food and non-alcoholic beverages” (20.6% of CPI) decreased by a 1.69% y-o-y in H1 2015. Moreover, “Transportation” (13.1% of CPI) and “Water, electricity, gas & other fuels” (11.9% of CPI), experienced yearly falls of 9.26% and 18.66%, respectively. In addition, other 2 sub-indices that respectively waned were “Health” (7.8% of CPI) and “Communication” (4.6% of CPI), recording a 4.80% and 3.51% y-o-y decline over the same period. The final sub-index that declined was “Recreation, amusement & culture”, which witnessed an annual downtick of 0.26% from June 2014 to 100.97 in June 2015.

However, Education sub-index, constituting 4.50% of the CPI, augmented by 4.52% y-o-y in H1 2015. Furthermore, clothing and footwear (5.4% of CPI) prices went up by an annual 4.13%. In addition, actual rent sub-index for households (old and new rent), with a stake of 3.4% in the CPI, augmented by an annual 9.88% over the above mentioned period.

Yearly CPI Components Change in June

Deflationary Pressures on the Lebanese Economy in H1 2015

Source: CAS

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