Economists attribute the continuing rise in consumer prices in Lebanon to regional instability and to the country's dependence on food imports.

According to a report published by Lebanon's Central Administration of Statistics last week, prices in Lebanon rose 3.1% in 2011.

The data, which was released on January 23rd, also revealed that the consumer price index rose 17.6% from December 2007 to December 2011.

The report also said in December 2011, prices for food and soft drinks rose 1.1%, alcoholic beverages and tobacco rose 0.5%, while prices for water, electricity, and fuels dropped 0.4%. Household equipment and ongoing home maintenance rose 0.1%, transportation costs dropped 2%, and health, education, and telecommunication prices were unchanged. Recreation, leisure, and culture prices rose 1.1%, and restaurant and hotel prices rose 0.1%.

Differences in rates

Nada Nehme, an engineer and official with the food safety and control division of the Lebanese Consumer Association, told Al-Shorfa the association releases its own price index that tracks 160 essential consumer goods in contrast to the index used by the Central Administration of Statistics which tracks a diverse basket of essential and luxury goods.

Nehme said the association's index showed that prices for essential consumer goods and household items rose at a higher rate since 2007 than the Central Administration of Statistics reported. She said the index used by the Central Administration of Statistics tracks many luxury items that do not fully reflect actual consumption, which has not changed.

"High prices in Lebanon are not the result of a global surge in prices but were caused by the paralysis in the local economy and a state of chaos where price limits do not exist. Profit margins are set by legislative decrees but are not being honoured," Nehme said. "This state of economic chaos will continually create crises and trigger high prices."

Economist Louis Hobeika said Lebanon is being affected by events in the Arab world, particularly Syria, and the economic situation in Europe, which is an important trade and investment partner.

He said the price index of the Central Administration of Statistics factors the value of consumption in Lebanese pounds only. High prices inflate the rate of consumption in Lebanese pounds even though actual consumption has not changed since 2009 because of the decline in purchasing power in Lebanon.

"Seventy-five percent of wages in Lebanon do not exceed $1,200 a month, and the low wage levels caused a decline in purchasing power," he said.

Lebanon 'vulnerable'

Jane Harrigan, an economist and adviser to the World Bank, said in a lecture she delivered at the American University in Beirut on December 1st that Lebanon incurred substantial economic costs in 2007 and 2008 because of the sharp rise in world food prices in addition to the nation's heavy dependence on imported food. She said the average Lebanese household spends 20-30% of their wages on food.

Harrigan said the World Bank in 2009 rated Lebanon as vulnerable in terms of food security and highly dependent on imports which triggered inflation and increased Lebanon's global trade deficit.

Atef Idriss, head of the Syndicate of Food Industries in Lebanon, told Al-Shorfa the consumption of expensive high-quality products has weakened in favour of moderate and low-cost products.

He said current prices do not reflect the reality of supply and demand in the domestic market.

"The rise in prices is caused by external factors such as unrest in the region and domestic factors related to some of the ministries' policies that lead to shortages in commodities and products in the market," Idriss said.