Lebanese shoppers feel government inflation figure is an under-estimate

Lebanese shoppers feel government inflation figure is an under-estimate
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Published August 28th, 2012 - 08:19 GMT via SyndiGate.info

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Prices of commodities continued to rise from beginning of this year.
Prices of commodities continued to rise from beginning of this year.
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The government has said inflation in Lebanon remained below 3.1 percent during the first seven months of 2012, but an advocacy group countered Monday that the figure does not convey an accurate picture of the soaring cost of basic commodities.

The consumer price index, a measurement of changes in the prices of a specific set of goods and services, was prepared by the prime minister’s office and released Sunday. Since July 2011, the index edged up by 4.5 percent, the premier’s office said in its report.

“From June 2012, it [the index] did not record any change. The annual rise in the consumer price index in July 2012 has brought the 12-month moving average to 5.0 percent,” the report said.

However, Nada Nehmeh, from Consumers Lebanon, believes that the CPI has deliberately failed to add other basic commodities to its basket to make the price index figures look reasonable.

“I think that the CPI for some reason doesn’t ... show the actual rise in consumer prices so people won’t react,” Nehmeh told The Daily Star.

The Cabinet, under tremendous pressure from the General Labor Confederation and other labor groups, was compelled to increase the salaries for both private and public sector employees in February of this year.

But this modest rise in salaries has prompted merchants and traders to hike prices of most commodities under the pretext that higher wages have driven up costs.

There is a general consensus among Lebanese that the Economy Ministry has no effective means to check the rise in prices of commodities. Some even accuse a handful of powerful families of controlling most of the local market thanks to exclusive distribution, whereby manufacturers give exclusive rights to sell its merchandise, a model abolished in most other countries.

Nehmeh added anyone can manipulate the index by removing certain items from the basket such as sugar and rice. She explained that Consumers Lebanon has 160 items in its basket which it submits to the public every quarter.

“Our survey of the prices is more realistic because we focus on the basic commodities that consumers depend on. Our last survey showed that prices of basic commodities rose to 7 to 10 percent after the holy month of Ramadan,” she added.

The government’s report shows the increase in the index was mainly due to a 8.5 percent increase in the prices of food and beverages.

“The index was also boosted by an upward movement of 5.5 percent in prices of miscellaneous goods and services, 1.8 percent in durable consumer goods, 1.8 percent in recreational services, 1.3 percent in housing services, 0.3 percent in health care services and 0.2 percent in transportation and telecommunications services,” according to the official report.

Nehmeh insisted that as long as few merchants have the exclusive rights to major items in Lebanon, prices will continue to soar unchecked.

“How can we claim to have a free market economy when a few individuals control the bulk of the market? There are certain items that cannot enter the Lebanese market without the prior approval of these companies,” Nehmeh said.

Late Prime Minister Rafik Hariri presented a proposal in 2002 that would allow any person or company to import any product without the prior approval of exclusive distributors.

But this plan was killed by politicians under pressure from importers. “Some of the exclusive dealers can make a profit of more than 200 percent. There is no way to lower prices if we don’t open the doors for open and unrestrained competition,” Nehmeh said.

She said that one way to determine the actual cost of living is to conduct a nationwide survey on what the average Lebanese consumes the most, and this way one can come up with a reasonable price index.

“We should add the cost of education and hospitalization so that we have a clearer picture of the cost of living,” Nehmeh added.

She said that the prices of gasoline and fuel have not been included in the price index because some consider these items as services and not basic commodities.

Copyright © 2012, The Daily Star. All rights reserved.

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