Syrian conflict causes strain on Lebanese economy
Inflation is rocketing in Lebanon as the conflict in Syria spills over the border, further destabilising the economy
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Consumer prices climbed to 9.3 per cent from the same month a year ago, according to data on the website of the country's statistics office. The previous month, annual inflation stood at 8.9 per cent.
"Global food prices have come up in the past few months and that has fed through to inflation," said Liz Martins, HSBC's senior economist for the Middle East and North Africa. "It is not driven by strong growth as the economy has been very weak but more about shortages and global import prices."
Lebanon's factory owners and farmers have suffered as high fuel prices have pushed up the cost of running generators and transport.
In response, many have been forced to pass on the higher costs of food and other goods to consumers, who are already grappling with rising education and medical costs.
To make matters worse, conflict in neighbouring Syria has further aggravated prices in border areas. An influx of Syrian refugees, some with cash handouts from aid workers, has stoked medicine prices by 34 per cent and food prices by 12 per cent in the north since the Syrian crisis began in March last year, according to a recent survey of households by the United Nations development programme.
Tensions near Syria's border with Lebanon have restricted access to cheaper education and health care for Lebanese citizens.
Inflation has emerged as a contentious issue in Lebanon as the economy has deteriorated. Officially, consumer prices did not rise above 3.1 per cent during the first seven months of the year, according to the government.
But consumer advocacy groups believe the rise has been much higher, citing the trend of people taking two or more jobs to make ends meet. Still, in recent months the official data has shown prices picking up at a brisker pace.
In contrast, Lebanon's economic performance has remained subdued. The economy contracted by 0.3 per cent in the second quarter, Byblos Bank estimated in a research note this month.
The Institute of International Finance this month downgraded its forecast for Lebanon's GDP growth from 2.1 per cent to 1.2 per cent for this year, citing the effect of turmoil in Syria as a key factor.
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