Lebanon + 1 more

Lebanon: VAM Update on Food Price and Market Trends (December 2020)

Situation Report
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• Since September 2020, the cost of the Food SMEB has been fluctuating between LBP 105,000 and LBP 111,000. The national average stands at LBP 111,457 in December 2020. Beirut and El Nabatieh governorates recorded the most expensive SMEB in December 2020.

• The Consumer Price Index (CPI) witnessed an annual inflation of 133% between October 2019 and November 2020, while Food Price Index (FPI) registered an inflation of 423% – representing an all-time high since CAS started price monitoring on a monthly basis in 2007.

• The monthly average informal exchange rate remained stable at around USD/LBP 8,000 between September 2020 and December 2020. However, a high daily volatility was registered over the past three months, tied directly to the political developments. This is double the rate applied by banks for withdrawals in LBP from dollar denominated accounts (LBP3,900/USD)

• Between January and September 2020, total imports volume decreased by 38 percent compared to the same period in 2019, while total food imports volume (excluding cereals) decreased by 18 percent. The volume of imported cereals slightly increased, at an approximate total of 1 million tons during the reporting period.

• Despite a challenging market environment, local commercial supply chains continue to be able to operate efficiently.
However, markets face the possibility of collapse due to increasing risks tied to the removal of subsidies and the LBP banknote liquidity crisis.

• Modifications to the current subsidization mechanism are expected soon. The Central Bank expects to be able to continue the current mechanism for two additional months only. These modifications will likely lead to a further increase in prices for food and essential goods.

• In 2020, an independent group of technical experts from the humanitarian community in Lebanon analysed the minimum and survival expenditure baskets and subsequently recommended a revised composition of the food and non-food items of the baskets to cover the actual consumption patterns of Syrian Refugees. As of 1st of January 2021, WFP Lebanon will be monitoring and reporting on the “new” Food Basket, which stands at LBP 129,605 in December 2020.