--- title: "Where Is Inflation in Lebanon Headed? | Ghazi Mahmoud" url: https://ghazimahmoud.com/en/articles/2024-05-08-b89c13/ lang: en description: "Remarkably, the annual change in Lebanon's consumer price index, published by the Central Administration of Statistics, fell in March 2024 to 70.36% compared with the same month in 2023." --- [All articles](https://ghazimahmoud.com/en/articles/) # Where Is Inflation in Lebanon Headed? [Brig. Gen. (Ret.) Dr. Ghazi Mahmoud](https://ghazimahmoud.com/en/about/) 8 May 2024 · 5 min read [Banking and money](https://ghazimahmoud.com/en/articles/money/)[The Lebanese economy](https://ghazimahmoud.com/en/articles/leb/) Remarkably, the annual change in Lebanon's consumer price index, published by the Central Administration of Statistics, fell in March 2024 to 70.36% compared with the same month in 2023. This drop is particularly notable as it follows three consecutive years of unchecked increases that peaked in March of last year at 263.84%. Yet it comes at a time when none of the macroeconomic indicators have shown any notable improvement since the onset of the financial and economic crisis, and when this decline coincides with numerous factors pushing prices upward. Among these upward pressures are the raising of the customs dollar rate and the exchange rate used to collect taxes and fees, the increase in all fees and taxes under the 2024 budget, and the higher value of new and renewed lease contracts. Added to this is the rise in maritime shipping costs and insurance contracts, which have increased by nearly 15% as a result of heightened navigation risks in the Red Sea. The inflationary pressures contributing to higher prices are not confined to domestic factors; rising prices in global markets also drive up domestic prices, especially since Lebanon imports most of its consumer needs from foreign markets. Lebanon's imports reached 109% of gross domestic product in 2023, at a time when food commodity prices around the world are witnessing a marked increase and overall inflation rates are exceeding the 5% threshold, according to a World Bank report on food security. Between December 2022 and December 2023, Lebanon recorded the second-highest nominal food price inflation rate in the world, with the annual change in the food price inflation index reaching 220%, preceded by Argentina with an inflation rate of 251%, and followed by Venezuela at 173% and Turkey at 72%. In terms of real inflation, Lebanon ranked seventh highest worldwide for the rate of change in food prices at 8%, followed by Turkey at 7%, according to a World Bank report. The direct cause of the surge in the consumer price index for March 2023 lies in the sharp rise in the exchange rate of the US dollar against the Lebanese pound, which reached nearly 140,000 Lebanese pounds before dropping to 107,000 Lebanese pounds, and then resuming its gradual decline to settle at its current rate. By contrast, the drop recorded by the index in March 2024 remains significant when compared with the annual change in this index recorded for February 2024, which stood at 123.21% compared with the same month in 2023. The reason behind the rise in the consumer price index for March 2024 lies in the increases that occurred across certain expenditure categories, most notably spending on education services, which exceeded 589%. Also contributing was the higher cost of new lease contracts, which exceeded 212%, while average housing-related expenses stood at more than 108%, pushing the consumer price index upward. This index could have risen at an even higher rate had the increase in the prices of food and non-alcoholic beverages exceeded 51%, and the same applies to transport prices, whose increase was limited to just 13%, compared with rises to 39% for clothing and 45% for health services. This allowed the overall rate of increase in the consumer price index to ease alongside a steep drop in the prices of remaining expenditure items. Meanwhile, the consumer price index continued to fluctuate during 2023 from February onward, albeit at a slower pace than in the preceding period, rising to 25.52% compared with January, and to 33.27% in March compared with February of the same year. The index for June of the same year fell to 7.21% compared with May of the same year, and continued its decline in September to register 1.4% compared with the previous month. In November, however, the index rose slightly to reach 2.6% compared with October, before falling again in February 2024 to 1.06% compared with January of the same year. Meanwhile, the consumer price index for March 2024 recorded an increase to 1.72% compared with February of the same year, even though March 2024 was marked by a drop in the annual change in the consumer price index compared with March 2023. If these figures show anything, they show that month after month the consumer price index was recording consecutive increases, even if at modest rates. Ultimately, however, the cumulative outcome of these increases is a rise in prices and consequently a rise in the inflation rate. In March 2024, for example, the inflation rate rose to 60.26% above what it had been during February of the same year. (The inflation rate equals the new consumer price index minus the previous consumer price index, divided by the previous consumer price index, multiplied by 100.) Despite the significance of the drop that occurred in the annual change in the consumer price index between March 2023 and 2024, the inflation rate continues to rise, bringing negative repercussions for the purchasing power of the national currency and depriving the Lebanese of a dignified life. The severity of inflation could be eased by increasing public spending to stimulate the national economy, an option that is now out of reach because of the state's fiscal deficit. Inflation can also be curbed by controlling the quantity of currency in circulation and maintaining exchange rate stability, yet standing in the way of this are the need to meet the state's growing expenditures on the one hand, and the increases introduced to the salaries and wages of public sector employees on the other. Meanwhile, the deterioration in the purchasing power of the Lebanese and the erosion of their incomes serve as proof that prices continue to rise, whether in pounds or in dollars, and as an indicator of worsening inflation, whether creeping or galloping. Monetary policies compensate neither for the absence of fiscal policies nor for the incapacity of state institutions; rather, the relevant authorities must join forces to resolve the financial and economic crisis and address its complications, foremost among them inflation and its repercussions. Translated from Arabic with AI. [Read it in Arabic](https://ghazimahmoud.com/articles/2024-05-08-b89c13/) ## Published in - [Channel 23](https://ch23.com/Article/164576/التضخم-في-لبنان-الى-أين؟) - [Lebanon Files](https://archive.lebanonfiles.com/2024/articles/باقلامهم/التضخم-في-لبنان-الى-أين؟/) - [Radar News](https://www.radar-news.net/التضخم-في-لبنان-الى-أين؟-بقلم-العميد-ا/) - [OZ Arab Media](https://ozarab.media/التضخم-في-لبنان-الى-أين؟/) ## More on banking and money [All articles on this subject](https://ghazimahmoud.com/en/articles/money/) [17 Jan 2024 · Banks and Restoring Lost Trust · Radar News, Lebanon Files ](https://ghazimahmoud.com/en/articles/2024-01-17-730f80/) [3 Jan 2024 · Between Unifying the Exchange Rate and Liberalizing It · Radar News, Lebanon Files ](https://ghazimahmoud.com/en/articles/2024-01-03-1ef118/) [22 Nov 2023 · More Than Mere Monetary Stability Is Needed · Channel 23, Lebanon Files ](https://ghazimahmoud.com/en/articles/2023-11-22-de319e/)