BEIRUT — Residents of Lebanon were paying over four times more for food and nonalcoholic beverages in February than they were just a year before, while clothing and footwear had become more than…
BEIRUT — Residents of Lebanon were paying over four times more for food and nonalcoholic beverages in February than they were just a year before, while clothing and footwear had become more than six times as expensive during the same period, according to the latest data from the Central Administration of Statistics.
The cost of food soared by 417 percent year over year, while clothing rose by 612 percent.
The consumer price index, which is used to measure inflation by recording the change in prices of a basket of common goods and services over a specified time period, was 155.4 percent higher in February, year over year. This marks an increase in inflation compared with January, when the index registered a year-on-year increase of 147.6 percent.
By comparison, inflation had reached 11 percent from February 2019 – 2020, and just 3.5 percent the year before that.
The most recent peak comes after the lira’s value plunged in mid-February, when it traded for as low as LL9,650 to the US dollar on the parallel market after having exchanged steadily at less than LL9,000 the month before.
The currency’s depreciation is leading prices to soar across the board.
Furnishings, household equipment and routine household maintenance fees grew by nearly 610 percent, while restaurant and hotel prices rose by 618 percent, the CAS, a government agency, reported. Transportation expenses increased by about 229 percent.
Inflation is expected to worsen in the coming months as the currency’s value has only plummeted further since February.
In March, the parallel market exchange rate hit more than LL15,000 to the greenback. It is now trading at just over LL12,000.
BDL’s dwindling dollar reserves are being depleted further as they are used to subsidize imports of wheat, fuel and medicine at the official rate of LL1507.5 to the dollar. The central bank is also using the reserves to subsidize some foodstuffs and agricultural and industrial supplies at BDL’s platform rate of LL3,900 to the dollar.
As a result, domestic water supply, electricity, gas and other fuel prices — which are included in these subsidies — increased by only about 23 percent year over year.
However, caretaker Finance Minister Ghazi Wazni told Reuters last week that BDL will run out of money to fund imports of basic necessities by the end of May. If subsidies are cut without a retargeting plan, experts warn that the lira’s value will lessen, shooting the price of basic necessities even higher.
Lebanon has been without a fully functioning government for almost eight months, since the last one resigned in the aftermath of the Aug. 4 explosion at the Beirut port. The country has no empowered political body to steer the economy out of its collapse as efforts to form a new cabinet remain at a standstill.