Lebanon's annual inflation slows to 14.2% in March, down from over 70%

24/04/2025 04:14 AST

Lebanon's annual inflation rate eased to 14.2 percent in March, down from 70.36 percent a year earlier, according to the latest data from the country's Central Administration of Statistics.

A key factor behind easing inflation is the stabilization of the exchange rate, with the Lebanese pound holding steady at around 89,500 Lebanese pounds per US dollar since mid-2023.

According to the International Monetary Fund's March staff report on Lebanon, this stabilization has been supported by the halt of monetary financing and foreign exchange subsidies, as well as improvements in fiscal revenue collection.

Concurrently, monetary tightening by the central bank has played a critical role. The volume of Lebanese pounds in circulation dropped sharply from $20.51 billion in 2020 to $0.73 billion in 2024, significantly dampening inflationary pressures, as noted in a 2024 analysis by Blominvest.

Dollarization has also accelerated across key sectors such as healthcare, education, and telecommunications, where services are increasingly billed in US dollars.

This shift has helped anchor price stability in dollarized segments of the economy, further moderating consumer price volatility, according to a 2024 article by Bloomberg.

A strong base effect also contributed to the lower year-on-year inflation reading, as March 2024 had recorded exceptionally high price levels, making current figures appear relatively subdued.

Despite the recent moderation, Lebanon's underlying economic conditions remain fragile. The expanding dollarization trend has also deepened inequality, disproportionately impacting households and workers who continue to be paid in the domestic currency.

On a monthly basis, consumer prices rose by 0.44 percent in March, a modest uptick by Lebanon's recent standards. The increase was driven mainly by higher costs in food and beverages, housing and utilities, and clothing and footwear.

However, the magnitude of monthly price changes has notably cooled compared to previous years, when double-digit jumps were not uncommon.

Regionally, inflation trends varied across governorates. The north of Lebanon recorded the highest monthly inflation at 1.41 percent, driven primarily by food and non-alcoholic beverage prices, which rose 3.8 percent month-on-month.

The Nabatieh region followed with a monthly rise of 0.81 percent, while Mount Lebanon posted the lowest increase at 0.11 percent and Beirut at 0.33 percent.

This divergence highlights the continued impact of geographic and income disparities on exposure to inflation.

Lebanon's consumer price index is calculated by CAS using a representative basket of goods and services based on 2013 consumption patterns. The CPI remains the country's most widely cited benchmark for tracking the cost of living.

Arab News