Lebanon inflation hits 269% in April amid currency devaluation pressures

The consumer price index was about 9 per cent higher, compared with March

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

Inflation in Lebanon hit an annual rate of about 269 per cent in April as the country's currency 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 34th consecutive month, led by soaring communication, alcoholic beverage and tobacco costs, and an increase in restaurant and hotel prices, the Central Administration of Statistics' Consumer Price Index showed.

The CPI increased by about 9 per cent from March 2023.

Lebanon's inflation rate had begun to decline after hitting 171 per cent last year, the highest in about four decades, and 155 per cent in 2021 but it started to pick up early this year as the country's central bank devalued the Lebanese pound in February.

The official exchange rate changed to 15,000 pounds to the US dollar, compared with the peg in place since 1997 of 1,507.50 to the greenback.

Communication costs increased more than fivefold in April, compared with the same month in 2022, while alcoholic beverages and tobacco costs increased nearly six times and restaurant and hotel prices leapt more than fourfold.

Health and transport costs, as well as the prices of food and non-alcoholic beverages, clothing and footwear increased more than four times each.

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.

The World Bank estimates that real gross domestic product declined 2.6 per cent in 2022 and is projected to contract 0.5 per cent this year.

Lebanon's economic crisis, the worst since the country's independence, is being 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.

The enactment of structural and financial reforms will provide the country with $3 billion of assistance from the IMF, which could also 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, as well as the election of a president and consensus among the country's political elite.

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

Updated: June 02, 2023, 6:26 AM