Inflation in Lebanon, as measured by the Consumer Price Index (CPI), has significantly eased in the first half of 2025, according to official data from the Central Administration of Statistics. By June, the overall CPI had risen approximately 15 percent year-on-year, marking a record drop from the staggering 253.55 percent increase recorded in the same period last year.

The marked decline in inflation is primarily attributed to the relative stabilization of the Lebanese pound’s exchange rate since March 2023, compared to the sharp depreciation that preceded it. However, it is important to note that the CPI figures are calculated based on prices denominated in Lebanese pounds, not foreign currency.

Despite this improvement, current price increases remain unjustifiably high for a country that has experienced exchange rate stability for more than two years. To understand the ongoing cost of living pressures and persistent inflation, a closer examination of individual spending categories reveals the root causes.

According to Al-Modon, certain goods and services saw price increases well above the general CPI rise, driving much of the overall inflation during the first half of the year. Food prices, for instance, surged by 20.79 percent year-on-year, roughly five percentage points higher than the overall market increase.

This persistent rise in food prices is linked to several factors: continued increases in shipping and insurance costs, regional security tensions including disruptions in the Red Sea, reduced domestic agricultural and industrial production, and a greater reliance on imports amid the fallout from the recent Israeli war in Lebanon. Additionally, government measures have so far failed to curb unfair market practices, particularly unjustified price hikes by importers and retailers.

Housing-related expenses have also climbed sharply. Rent costs increased by 22.45 percent year-on-year through mid-2025, while the cost of owned apartments jumped 30 percent during the same period. These increases reflect heightened demand for housing in certain areas due to war-related destruction or damage affecting roughly 100,000 residential units. Rental prices alone rose by about 4 percent in June, influenced by the start of the summer tourist season and the return of expatriates.

Healthcare costs rose by 21.7 percent, largely due to the same import challenges driving food price increases, particularly higher medication costs. Education expenses surged by 30.6 percent, outpacing all other categories, as private schools and universities continued raising tuition fees.

Conversely, some goods and services experienced little or no price change. Transportation costs increased only about 2 percent, buoyed by falling fuel prices this year. Telecommunications costs actually fell by 3.27 percent, helping to slightly offset the overall CPI rise. This decline reflects stable cellular and internet service rates throughout the previous year.

Ahead of the summer season, hotel and restaurant prices rose by 12.29 percent, consistent with the annual pattern of businesses increasing rates before the influx of tourists and returning expatriates. Entertainment and cultural activities saw more modest price increases, under 9 percent.

High inflation remains a major driver of social inequality in Lebanon. Low-income households, with limited ability to absorb rising prices or increase earnings to meet basic needs, are disproportionately affected compared to wealthier groups. This inequality has contributed to a sharp rise in poverty rates, which now approach 44 percent, up from roughly 12 percent a decade ago.