The Consumer Price Index (CPI), which tracks the evolution of prices in Lebanese Lira, revealed a modest monthly rise of 0.64 percent but a staggering 35 percent increase on an annual basis. This slight increase between July and August reflects a stabilization of prices in the short term, while the annual inflation rate has decelerated notably compared to the 35.37 percent recorded at the end of July.

One of the key reasons for this deceleration is the stabilization of the exchange rate between the Lebanese Lira and the US Dollar. By August 2023, the exchange rate had settled after years of volatility that saw the Lira lose over 90 percent of its value due to Lebanon’s ongoing economic and financial crisis. Despite this stability, the CPI’s 35 percent annual increase suggests that the cost of living, as measured across various sectors, has risen sharply, confirming that Lebanese households are facing substantial economic hardship.

The surge in prices is having a severe impact on Lebanese households, especially as it is not solely driven by exchange rate fluctuations. The breakdown of the CPI reveals that education costs have seen a massive annual increase of 587.67 percent, the largest rise among all categories. This spike, recorded in the October 2023 CPI, underscores the enormous financial burden placed on families seeking education for their children.

Other sectors have also experienced significant price hikes, with goods and services increasing by 42.84 percent and leisure costs rising by 37.41 percent. Essential items such as telecommunications (+28.72 percent), clothing and footwear (+26.59 percent), and food and non-alcoholic beverages (+21.34 percent) have also seen considerable year-over-year growth. Alcohol and tobacco prices, while increasing more moderately, still rose by 16.21 percent in the same period.

On a monthly basis, the CPI showed smaller fluctuations, with most categories experiencing changes of less than one percent. However, notable exceptions included furniture prices, which rose by 3.30 percent, and food and non-alcoholic beverages, which increased by 2.01 percent. Geographically, the rise in consumer prices was more pronounced in Beirut (+1.13 percent), followed by North Lebanon (+1 percent), South Lebanon (+0.81 percent), Mount Lebanon (+0.5 percent), Nabatiyeh (+0.46 percent), and Bekaa (+0.1 percent).

Interestingly, the rise in prices cannot be attributed to an increase in energy costs, as global oil prices have generally been on the decline between August 2023 and August 2024. Nor can it be linked to international food prices, which have also fallen during the same period, according to the World Food Program index that dropped from 122 points in 2023 to 120.7 points a year later.

The inflationary pressures in Lebanon may partly stem from fiscal adjustments, particularly after the adoption of the 2024 budget, which was implemented in mid-February. This budget formalized the alignment of taxes and other levies with the current exchange rate, adding further strain on the cost of living.