Sitting outside a coffee shop in the coastal city of Batroun, Sara Khoury sips her coffee, taking in the serene sea views of her homeland.

On vacation from Dubai, where she resides as a 27-year-old Lebanese expat, Khoury is taken aback by the high prices in Lebanon, finding them comparable to those in one of the world’s most expensive cities.

“Lebanon can no longer be considered an affordable country; prices are high almost everywhere,” Khoury, who works in sales in the F&B sector, told Al Arabiya English. “This applies to restaurants, grocery goods, hotels and other services. We’re seeing prices in modest restaurants that are nearly on par with those in upscale places in Dubai.”

Beirut ranks as the 6th most expensive city in the Arab world, trailing only behind Dubai, Abu Dhabi, Doha, Riyadh and Jeddah, according to the latest report from Numbeo’s annual Cost of Living Index. Globally, it ranks as the 113th most expensive city out of 178 cities with a cost of living index of 45.2 points. For perspective, Geneva tops the index with a score of 101.7.

Despite its high cost of living, Beirut’s quality of life falls sharply in comparison. In Numbeo’s Quality of Life Index, the city ranks a low 171st out of 178 cities worldwide.

Even with the economic crisis that has dramatically diminished residents’ financial capacity, the cost of living in the Lebanese capital remains elevated.

Since late 2019, Lebanon has been engulfed in one of the worst economic crises in its history.

The national currency, the Lebanese pound, has progressively lost over 98 percent of its value against the dollar.

The financial crash wiped out people’s life savings and led to hyperinflation.

A May report by the World Bank revealed that poverty in Lebanon had more than tripled over the past decade, now affecting 44 percent of the population. The report also highlighted that poverty was unevenly distributed across the country.

With the rapid expansion of a dollarized, cash-based economy, Lebanese households earning in dollars have managed to preserve their purchasing power to some extent. In stark contrast, those without access to foreign currency are more vulnerable to escalating inflation.

Last April, the government’s Central Administration of Statistics said that Lebanon’s inflation rate had fallen to double digits for the first time in nearly four years, as businesses and shops increasingly priced their goods in dollars instead of the local pound.

While dollarization has helped ease inflation, it has not eradicated it, leaving a significant portion of the population still struggling with rising prices.

Myriam, a 28-year old school teacher who prefers not to give her last name, is one of many facing this challenge. To make ends meet, she works a second job in the afternoon, handling bookings and operations for a padel club near her home.

“One income is not enough to pay bills, a car loan and personal expenses,” she said. “Prices are crazily high, almost as if they’ve returned to or exceeded pre-crisis levels. I can barely afford to go out more than three times a month.”

According to Numbeo, a meal at an inexpensive restaurant costs an average of $9, while a meal for two at a mid-range restaurant would cost around $50.

Factors driving soaring prices

Patrick Mardini, economist and CEO of the Lebanese Institute for Market Studies, attributes the high cost of living in Lebanon to monopolized utilities and the influence of tourism.

“Electricity, telephone and internet services are very costly in Lebanon due to monopolies. The monopoly over electricity production, for example, results in poor service with frequent outages,” he told Al Arabiya English. “Another factor contributing to high prices is tourism. Restaurants, for instance, are relatively expensive due to the strong demand from tourists and expats during the summer and holidays. This sector mainly caters to people living abroad who can afford premium prices.”

The Lebanese economy is heavily reliant on the tourism industry. In 2023, tourism revenues reached $5.41 billion, marking a slight 1.7 percent increase from the previous year, according to data from Lebanon’s central bank.

This influx largely comes from visitors, predominantly members of the Lebanese diaspora.

This summer looks promising as well. In May, Beirut’s international airport welcomed 265,000 visitors, and the number surged to 405,000 in June, as reported by local media.

These figures persisted notwithstanding the near-daily cross-border hostilities between Israel and the Lebanese militant group Hezbollah.

Both parties have been engaged in ongoing exchanges of fire since October 8, one day after Hamas’ surprise attack on Israel, which prompted Israeli retaliation against Gaza.

In response, Hezbollah established what it described as a “support front” for the Palestinians in southern Lebanon, aimed at drawing Israeli military resources away from Gaza.

Struggling through economic hardship

For those living in Lebanon, conditions are challenging, with cross-border attacks compounding existing difficulties.

“The economic downturn hit hard, and the Lebanese population was struck by a trifecta of financial blows: loss of savings, reduced income and eroded purchasing power, especially for those earning in Lebanese pounds. Today, Lebanon’s per capita income is 60 percent lower than pre-crisis levels, underscoring the financial strain,” Mardini noted.

For George, a 55-year-old father of three whose name was changed for anonymity, the economic struggle is a daily reality. Employed full-time at a five-star hotel, George often takes on double shifts to support his family. Despite his efforts, he finds it difficult to manage the rising costs of living.

“The expense of groceries has gone up,” George said. “Items that were affordable at the onset of the crisis are now much more expensive. Rent is another heavy burden. It feels like every outlay has increased. I work extra hours to support my family, but we’re constantly adjusting our budget just to keep up.”

Mardini sees that recovery demands economic growth, yet projections for this year suggest stagnation, with growth expected between zero and 1 percent.

“For Lebanon to return to its pre-crisis conditions, it would require sustained double-digit growth rates over several years. Without such a recovery, the country is likely to remain entrenched in poverty for the foreseeable future,” he explained.

Reflecting on this, George added, “Our salaries are now insufficient to cover basic living expenses, let alone provide a comfortable standard of living.”