Lebanon + 1 more

Lebanon: VAM Update on Food Price Trends - August 2020

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• The economic situation continues to deteriorate due to the on-going simultaneous fiscal, financial, and monetary crises, compounded by the COVID-19 pandemic and the port explosion in Beirut on 4 August 2020. The hyperinflation due to the currency depreciation and possible removal of subsidies on key basic commodities and fuel pose additional downward pressures on the economic market outlook.

• The Food SMEB has recorded its highest price in August 2020 at LBP 103,300 (up 168 percent since October 2019). The variation between the cost of the SMEB observed in July and August was up 3 percent, suggesting that food prices are high but somehow stable. Beirut and Mount Lebanon are the governorates recording the most expensive SMEB. The price of the non-food SMEB increased by 170 percent since October 2019. The non-food SMEB recorded an increase of 12 percent between July and August 2020.

• The informal exchange rate slightly appreciated between July and August (at LBP 7,420/USD in August, against LBP 3,900/USD applied by the banks). No major changes in the exchange rates used by suppliers of contracted shops were observed in the weeks immediately following the port explosion.

• In the first half of 2020, total imports volume decreased by 41 percent compared to the first half of 2019, while total food imports volume (excluding cereals) decreased by 17.6 percent. The volume of imported cereals slightly increased, at an approximate total of 660,000 tons in the first half of 2020.

• The planned removal of import subsidies is expected to put additional strain on households’ purchasing power if cost is entirely passed on to consumers, with the price of bread potentially increasing between 50 and 209 percent and that of fuel by 350 percent.