Exchange Rates Are No Longer the Primary Driver of Price Inflation: 57 Increases Since 2019

The Central Statistics issued the price index for March, showing that prices continued to rise, bringing the cumulative inflation rate from the end of 2018 to the end of March 2024 to 57.51%. The monthly increase in prices during March 2024 compared to March 2023 reached 70.36%. The categories of restaurants and hotels lead inflation with an increase of 284.07% since the end of 2018, followed by food products and non-alcoholic beverages at 233.79%, and alcoholic beverages, tobacco, and narcotics at 179.52%. Basic items are the most affected by price inflation, indicating that Lebanese households are struggling with rising costs in their essential needs. This occurs despite a relative stability in the exchange rate over the past year, suggesting that discussions following the crisis about the exchange rate being the primary driver of price inflation are no longer valid as an indicator for reading inflation. Recent figures clearly indicate that the exchange rate no longer drives inflation; instead, prices seem to be rising in dollars, meaning that these ongoing shocks have more reasons related to external factors. This can be clearly observed in the dollarization of transactions, which has become dominant in most commercial dealings in the market. This phenomenon has been noted since the ministries of energy, economy, and tourism allowed pricing and payments in dollars, contributing significantly to price increases.