Lebanon inflation hits 264% in March as currency devaluation bites

The consumer price index was 33 per cent higher compared with February

Retired members of Lebanon's security forces take part a protest in Beirut as they demand inflation adjustments to their pensions. EPA

Inflation in Lebanon hit an annual rate of about 264 per cent in March as the Lebanese pound continued to lose value on the parallel and official markets since it was devalued by 90 per cent at the start of February.

Hyperinflation continued for the 33rd consecutive month, led by soaring communication, alcoholic beverage and tobacco costs, restaurant and hotel prices, health, as well as rising food prices and water and energy rates, the Central Administration of Statistics' Consumer Price Index showed.

The CPI increased by about 33 per cent from February 2023.

Inflation had begun to decline after hitting 171 per cent last year, the highest in nearly four decades, and 155 per cent in 2021.

Lebanon's central bank devalued the pound/lira in early February, with the official exchange rate changing to 15,000 to the US dollar, compared with the peg in place since 1997 of 1,507.50 to the greenback.

This led to a surge in consumer prices in March and the Lebanese pound trading in the parallel market as much as 140,000 to the dollar earlier this month.

Lebanon's worst economic and financial crises has been exacerbated by a political impasse that has blocked the formation of a new government and the enactment of reforms required to unlock billions of dollars in aid from the International Monetary Fund and other international donors.

Communication costs increased more than sevenfold in March, compared with the same month in 2022, while alcoholic beverages and tobacco jumped more than fivefold.

Health costs increased more than four times. Clothing and footwear prices and the rates of restaurant and hotels leapt more than threefold. Transport costs rose by three times.

Lebanon's economy contracted by about 58 per cent between 2019 and 2021, with gross domestic product falling to $21.8 billion in 2021, from about $52 billion in 2019, according to the World Bank — the largest contraction on a list of 193 countries.

Lebanon's political elite have yet to enforce critical structural and financial reforms required to unlock $3 billion of assistance from the IMF.

Securing the IMF funds would pave the way for an additional $11 billion in assistance that was pledged by international donors at a Paris conference in 2018.

Reforms hinge on the formation of a new government, the election of a president and consensus among the country's political elite.

Politicians are deadlocked over the formation of a new cabinet 11 months after parliamentary elections were held and five months after the six-year term of former president Michel Aoun expired at the end of October.