“Lebanon’s inflation rate is worse than Zimbabwe’s and Venezuela’s”

Lebanon’s annual rate of inflation has risen to the highest of all countries tracked by Bloomberg,
surpassing Zimbabwe and Venezuela, as the financial meltdown in the Middle East nation worsens.

The consumer price index rose 137.8% from a year earlier in August, compared with 123.4% in July,
according to the Lebanon Central Administration of Statistics. Consumer prices rose 10.25% from a
month earlier while food prices rose 20.82%.

Lebanon’s inflation has skyrocketed in the past two years as the country’s financial and economic crisis
spirals out of control, with politicians doing very little to mitigate its impact. The currency has lost nearly
90% of its value and plunged three quarters of residents into poverty.

Authorities have in recent months started reducing subsidies, as most items are now priced at the black
market exchange rate. The central bank is running out of cash and has repeatedly warned the
government about continuing subsidies.

After nearly 13 months of paralysis, billionaire and former premier Najib Mikati formed a new
government that seeks to resume stalled bailout talks with the International Monetary Fund and
creditors to restructure the debt. Lebanon defaulted on $30 billion of Eurobonds last year.

ALBANY, New York — As of 2020, Lebanon is ranked as having the fourth highest inflation rate globally
at 85.45%. This rapid hyperinflation has severely impacted the people of Lebanon, especially
impoverished communities. Imports, as a result of this, have skyrocketed in price and the cost of food
and non-alcoholic beverages have inflated by more than 441% since 2019. Inflation has also affected the
prices of clothing, transportation, healthcare, rent and education.

The Causes and Start of Inflation

Lebanon has been struggling with internalized political corruption for years, which has taken a toll on its
economy. In late 2019, the Lebanon Central Bank was exposed to a Ponzi scheme as they struggled to
keep the lire’s value afloat; the bank was borrowing money at above-market interest rates to pay back
its debts. While this was happening, Lebanese citizens were growing increasingly more and more
frustrated with

their government. They suffered under poor internet connection, power cuts, minimal access to drinking
water and limited healthcare. Citizens began to protest against the economic turmoil caused by their
government and the Prime Minister attempted to tax WhatsApp calls to generate revenue.

Increased economic pressures arising out of COVID-19 related quarantines and shut-downs in early 2020
worsened the situation. Frustration grew to a breaking point in August 2020 when an explosion hit a
major Lebanese city, Beirut, killing at least 200 people and injuring 5,000 more. This resulted in the
Prime Minister and his Government stepping down and bringing about political and economic change.
Since then, the Lebanese Government has yet to rebuild itself, making attempts to process aid and
reduce inflation more difficult.
How the Inflation Rate Effects Humanitarian Aid

In previous years, Lebanon has had an exchange rate in place to help control inflation. Before 2020, the
Central Bank limited inflation to 3% per year. However, this spike in inflation now has lire conversions
set at 6,240 lire to the dollar as the official rate, while on the street, the transaction goes for nearly
double. With the potential to lose 20 million dollars a month, foreign aid from the United Nations (U.N.)
will be severely impacted, a critical result during such a global crisis.

The U.N. agencies and other Non-Government Organizations (NGOs) have donated nearly $500 million
to Lebanon. They currently distribute debit cards and vouchers. However, at the current exchange rate,
the Lebanese only get 6,240 lire per dollar. The organizations making the donations are trying to
convince Lebanese authorities to process the donations through the informal rate, at which Lebanese
citizens would receive 14,000 lire per dollar. However, Lebanon’s Central Bank has been holding out on
this request. The World Bank agrees, pointing out that should this request go through, it could worsen
the already persistent inflation, further impacting impoverished communities.

Possible Solutions

One possible solution to the economic aid crisis has been distributing the donations in dollars. The
World Bank notes that this can alleviate stress on the lire, ease inflation and help relieve the surge in the
money supply. However, due to the various outsource of donations, it may not be feasible to allocate
$1.3 billion to all of those who need it and it would be especially unfair to those who receive their aid in
lire instead. What is more critical is that Lebanon reestablishes its government in order to regulate aid
transactions and get the country back on track.

Lebanon’s annual inflation rate jumped to a new record high of 239.69% in January of 2022 from
224.39% December 2021, mainly boosted by faster rises in prices of housing & utilities (104.14% vs
103.08%), food & non-alcoholic beverages (483.15% vs 438.65%), transport (541.42% vs 522.39%), amid
a sharp depreciation of the Lebanese pound and political crisis. Also, prices increased more for health
(444.83% vs 404.94% in December), furnishings, household equipment and routine maintenance
(260.29% vs 243.73%). On a monthly basis, consumer prices went up 7.69% in January, the least in 8
months, easing from a 16.52 percent gain in the prior month.

Lebanon Inflation Rate

In Lebanon, the most important categories in the consumer price index are housing, water, electricity,
gas and other fuels (28.5 percent of the total weight) and food and non-alcoholic beverages (20.6
percent of the total weight) and transport (13.1 percent). The index also includes: health (7.8 percent);
education (5.9 percent); clothing and footwear (5.4 percent) and communication (4.6 percent).
Furnishings, alcoholic beverages and tobacco, recreation and cultural activities, hotels, restaurants and
other goods and services account for the remaining 14 percent of total weight.

Lebanon Inflation Rate Hits New Peak

Lebanon’s annual inflation rate jumped to a new record high of 239.69% in January of 2022 from
224.39% December 2021, mainly boosted by faster rises in prices of housing & utilities (104.14% vs
103.08%), food & non-alcoholic beverages (483.15% vs 438.65%), transport (541.42% vs 522.39%), amid
a sharp depreciation of the Lebanese pound and political crisis. Also, prices increased more for health
(444.83% vs 404.94% in December), furnishings, household equipment and routine maintenance
(260.29% vs 243.73%). On a monthly basis, consumer prices went up 7.69% in January, the least in 8
months, easing from a 16.52 percent gain in the prior month.

Lebanon Inflation Rate Jumps to New Record

Lebanon’s annual inflation rate surged to a fresh record peak of 224.39% in December of 2021 from
201.07% in the previous month, boosted by faster rises in prices of housing & utilities (103.08% vs
80.69%), food & non-alcoholic beverages (438.65% vs 357.95%), amid a sharp depreciation of the
Lebanese pound and political crisis. Meanwhile, transport prices continued to rise (522.39% vs
579.90%). Also, prices advanced more for health (404.94% vs 374.27% in November), furnishings,
household equipment and routine maintenance (243.73% vs 208.03%), and recreation & culture
(152.20% vs 136.43%). On a monthly basis, consumer prices were up 16.52% in December, the most
since June 2020, accelerating from a 10.63 percent gain in November.

Lebanon Inflation Rate Hits Fresh Record High

Lebanon’s annual inflation rate jumped to a new record high of 201.07% in November of 2021 from
173.6% in the previous month, boosted by faster rises in prices of housing & utilities (80.69% vs 75.72%),
food & non-alcoholic beverages (357.95% vs 303.66%), and transport (579.90% vs 508.2%), amid a sharp
depreciation of the Lebanese pound and political crisis. At the same time, prices increased more for
clothing & footwear (238.17% vs 209.08% in October), furnishings, household equipment and routine
maintenance (208.03% vs 150.02%), and recreation & culture (136.43% vs 126.8%). On a monthly basis,
consumer prices went up 10.63% in November, easing from a 16.42 percent rise in October.

Inflation Rate in Lebanon averaged 22.49 percent from 2008 until 2022, reaching an all time high of
239.69 percent in February of 2022 and a record low of -4.67 percent in September of 2015.