The question many Lebanese now ask is no longer, “What is the dollar exchange rate?” but rather, “What can $100 actually buy today?”

More than six years after Lebanon’s financial collapse began, the U.S. dollar remains the dominant currency in the economy, yet its purchasing power inside Lebanon has eroded significantly. The prices of basic goods and services have continued to climb, leaving households increasingly unable to cover essential expenses with an amount that once provided a measure of financial security.

Despite the stabilization of the Lebanese pound at 89,500 to the dollar since July 2023 and the near-complete dollarization of the economy, living costs have continued to rise because of a combination of domestic inflation, the removal of subsidies, the dollarization of taxes and government fees, and higher energy, transportation, and service costs.

A simulation based on average retail prices in Lebanon shows that a basic basket of food and household essentials for a small family can now cost between $90 and $100, leaving little room for additional purchases. The basket does not include generator fees, fuel, telecommunications, medicine, or unexpected expenses, which consume a substantial share of household budgets every month.

For many Lebanese, the result is a striking paradox: the $100 bill remains the country’s most widely circulated banknote, but it no longer carries the purchasing power it had at the beginning of the crisis.

‘Dollarized inflation’

Jassem Ajaka, a professor of economics at the Lebanese University, told Nidaa Al-Watan that Lebanon is confronting what economists describe as the erosion of the dollar’s purchasing power, often referred to as “dollarized inflation.”

“Today, $100 can no longer cover basic needs the way it did at the start of the crisis,” Ajaka said. “At that time, many goods were subsidized by the Banque du Liban, and the cost of public services for households was relatively low.”

He said that after the crisis, subsidies on fuel, medicine, and essential goods were removed entirely, while taxes, customs duties, and public service fees were increasingly dollarized and raised.

“The collapse of the electricity sector and other public institutions shifted enormous operating costs onto businesses and households,” he said. “Generator subscriptions, water, security services, and other operational expenses are all paid in cash U.S. dollars.”

Ajaka also pointed to global inflation driven by regional conflicts, which has increased oil prices and, in turn, shipping, supply-chain, and insurance costs.

“Because Lebanon imports the vast majority of what it consumes, and because market oversight remains weak while merchants have increased profit margins to hedge against risk, $100 has lost between 40% and 60% of its real purchasing power in the Lebanese market compared with the early years of the crisis,” he said.

A growing burden on households

Ajaka said the consequences have been severe.

“This has had catastrophic effects on households,” he said. “The cost-of-living crisis now affects even families who are paid in dollars or receive remittances from abroad.”

He said the result has been a widening poverty rate, the erosion of the middle class, and the emergence of a survival-oriented consumption pattern focused primarily on food, energy, and medicine.

At the broader economic level, he said, rising dollar-denominated costs have weakened the competitiveness of productive sectors such as industry and agriculture because of higher production expenses.

“Commercial activity in nonessential sectors has contracted, and the cash economy operating outside the banking and tax systems has deepened,” Ajaka said. “Lebanon is now experiencing a double crisis: the collapse of its national currency on one hand and a continuing rise in the cost of living in a foreign currency on the other.”

‘The problem is local, not global’

Economist Nassib Ghobril offered a different interpretation, arguing that the decline in the dollar’s purchasing power inside Lebanon should not be confused with the performance of the U.S. currency on global markets.

“The decline in the dollar’s purchasing power in Lebanon should not be linked to the dollar’s performance internationally,” Ghobril told Nidaa Al-Watan. “The main driver is local inflation and the structural pressures weighing on the Lebanese economy.”

He pointed to Lebanon’s Consumer Price Index, the country’s official inflation gauge, which reached 221% in 2023 before slowing to 45% in 2024 and 15% in 2025.

“Even though inflation has declined, those levels remain extremely high by international standards,” he said.

Inflation eased to about 12% during the first two months of 2026 but rose again to 20% in April because of the regional war and higher oil prices before falling back to 17% in June.

Ghobril said the U.S. Dollar Index, which measures the dollar against a basket of major currencies, fell by roughly 10% in 2025 because of tariff-related tensions, fiscal pressures, and Federal Reserve interest-rate cuts, but recovered part of those losses in the first half of 2026.

“That means attributing Lebanon’s inflation and the decline in the dollar’s purchasing power to weakness in the U.S. dollar globally is misleading,” he said.

More than inflation

Ghobril argued that the shrinking purchasing power of $100 reflects not only inflation but also the growing burden of household expenses.

“Families are now paying two electricity bills and three water bills, along with rising taxes and fees,” he said. “The cost of using a car has also increased because of deteriorating roads, traffic congestion, and transportation chaos.”

Those expenses, he said, are draining household income far more than fluctuations in the dollar on international markets.

Ghobril noted that the Lebanese pound has remained stable at 89,500 to the dollar since July 2023 despite wars and security shocks, suggesting that the exchange rate is no longer the primary driver of inflation.

“The stability of the exchange rate has actually helped contain inflation,” he said. “Today’s inflation is driven mainly by domestic and structural factors rather than movements in the dollar on global markets.”