Lebanon: Prices of Food Commodities on the Rise Despite Drop in Exchange Rate

Citizens in a fruit and vegetable market in Beirut, Lebanon (Reuters)
Citizens in a fruit and vegetable market in Beirut, Lebanon (Reuters)
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Lebanon: Prices of Food Commodities on the Rise Despite Drop in Exchange Rate

Citizens in a fruit and vegetable market in Beirut, Lebanon (Reuters)
Citizens in a fruit and vegetable market in Beirut, Lebanon (Reuters)

Lebanese citizens are getting accustomed to the increasing prices of the food commodities, but they believe the prices will drop with the decline in the exchange rate.

However, this is not the case as a small tour to the market reveals that prices are still increasing, and when asked about the rates of the items, merchants usually respond that it varies each hour depending on the exchange rate.

The Consumers’ Lebanon index shows that prices increased 22.84 percent during August when compared to April, May, and June. However, the price of the US dollar in the exchange market did not exceed 8,000LL since the second week of August, and it even fell below 7,000 LL on some days.

Consumers’ Lebanon is an association that is concerned with the protection of the rights of the Lebanese consumers.

The biggest increase during August was in the price of meat, as it rose 32.70 percent, followed by the prices of canned foods, oils, and grains which saw a 28.60 percent rise. Some types of bread increased 25 percent and dairy products’ prices increased 18.20 percent, while vegetables and fruits had the lowest increase rate with 21.38 percent and 1.8 percent respectively.

Vice President of Consumer’s Lebanon Nada Nehme said that the prices of food commodities continue to rise amid the absence of any supervisory role and in an environment controlled by monopolies.

She told Asharq al-Awsat that merchants control prices claiming they bought the commodities at a high rate, explaining that this does not justify selling the same product at the same high price when the exchange rate drops.

Nehme predicts that the prices of food commodities will continue to rise, noting that rates in Lebanon are the highest in the region.

In turn, the head of importers’ syndicate, Hani al-Bohsali, is surprised by the unjustified high prices, however, he believes that it is natural for prices not to drop given that they were originally calculated on the basis of an upper limit for the exchange rate of 7,000 Lebanese pounds per dollar.

He explained that any increase above this limit will result in the inability to sell these goods, adding that it is natural for commodity prices to remain the same, even if the dollar exchange rate is within the range of 7,000 LL.

Bohsali considered that commodity prices could start to decline when the exchange rate falls below 7000. He explained that even this may take several weeks, especially that the merchant will have to sell his old stock which he bought at a high exchange rate.

Meanwhile, citizens search for subsidized commodities included in the food basket that the Central Bank supports at a 3,900 LL exchange rate. But, in most cases, these goods are not available given their limited quantities and the complex requirements.

Bohsali pointed out that the Ministry of Economy did not bind merchants to the subsidized items, so most preferred to buy other products because the food basket stipulates direct distribution to major stores and small shops with a specified profit margin.

Nehme confirms that subsidizing the food basket did not contribute to lowering the prices of commodities, explaining that Consumers’ Lebanon believes that the Ministry’s policy was wrong.

She indicated that the subsidized items reached 10 to 20 percent of consumers at best.

The Minister of Economy in the caretaker government, Raoul Nehme, sent a letter to the Governor of the Central Bank, Riad Salameh, requesting the lifting of subsidies on commodities related to animal and agricultural production, given that it is a waste of public funds.

Nehme tweeted that since the government began subsidizing those commodities, their prices have not decreased, and some even increased.

Bohsali confirmed that there is no indication that food commodities will be scarce, even after the Beirut port explosion, but he pointed out that a large number of goods are still in the port, and this increases the costs for importers, which could lead to an increase in their prices later.



UN's FAO: World Food Prices Fall for 3rd Month in November

FILE PHOTO: Prices of food are displayed at the Borough Market in London, Britain May 22, 2024. REUTERS/Maja Smiejkowska/File Photo
FILE PHOTO: Prices of food are displayed at the Borough Market in London, Britain May 22, 2024. REUTERS/Maja Smiejkowska/File Photo
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UN's FAO: World Food Prices Fall for 3rd Month in November

FILE PHOTO: Prices of food are displayed at the Borough Market in London, Britain May 22, 2024. REUTERS/Maja Smiejkowska/File Photo
FILE PHOTO: Prices of food are displayed at the Borough Market in London, Britain May 22, 2024. REUTERS/Maja Smiejkowska/File Photo

World food commodity prices fell for a third consecutive month in November, with all major staple foods except cereals showing a decline, the United Nations' Food and Agriculture Organization said on Friday.

The FAO Food Price Index, which tracks a basket of globally traded food commodities, averaged 125.1 points in November, down from a revised 126.6 in October and the lowest since January, Reuters reported.

The November average was also 2.1% below the year-earlier level and 21.9% down from a peak in March 2022 following Russia's full-scale invasion of Ukraine, the FAO said.

The agency's sugar price reference fell 5.9% from October to its lowest since December 2020, pressured by ample global supply expectations, while the dairy price index dropped 3.1% in a fifth consecutive monthly decline, reflecting increased milk production and export supplies.

Vegetable oil prices fell 2.6% to a five-month low, as declines for most products including palm oil outweighed strength in soy oil.

Meat prices declined 0.8%, with pork and poultry leading the decrease, while beef quotations stabilized as the removal of US tariffs on beef imports tempered recent strength, the FAO said.

In contrast, the FAO's cereal price benchmark rose 1.8% month-on-month. Wheat prices increased due to potential demand from China and geopolitical tensions in the Black Sea region, while maize prices were supported by demand for Brazilian exports and reports of weather disruption to field work in South America.

In a separate cereal supply and demand report, the FAO raised its global cereal production forecast for 2025 to a record 3.003 billion metric tons, compared with 2.990 billion tons projected last month, mainly due to increased wheat output estimates.

Forecast world cereal stocks at the end of the 2025/26 season were also revised up to a record 925.5 million tons, reflecting expectations of expanded wheat stocks in China and India as well as higher coarse grain stocks in exporting countries, the FAO said.


World Bank Forecasts 4.3% Growth for Saudi Economy, Supported by Non-Oil Activities

The Saudi flag. Asharq Al-Awsat
The Saudi flag. Asharq Al-Awsat
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World Bank Forecasts 4.3% Growth for Saudi Economy, Supported by Non-Oil Activities

The Saudi flag. Asharq Al-Awsat
The Saudi flag. Asharq Al-Awsat

The World Bank affirmed on Thursday that Saudi Arabia's economy has gained significant momentum for 2026-2027, driven by robust non-oil sector expansion under Vision 2030.

In a report titled “The Gulf’s Digital Transformation: A Powerful Engine for Economic Diversification,” the World Bank said growth is expected to persist in the Kingdom with non-oil activities expanding by 4% on average.

The report lifted its forecast for Saudi Arabia’s real GDP growth to 3.8% in 2025 compared to a 3.2% last October.

The forecast represents a major upward revision affirming the resilience of the Saudi economy and its ability to absorb external volatility. It also indicates growing confidence in the effectiveness of ongoing structural reforms within Vision 2030.

On Tuesday, Saudi Arabia approved its state budget for 2026, projecting real GDP growth of 4.6% in 2026.

The report showed that in the Kingdom, economic momentum is strengthening across oil and non-oil sectors with non-oil activities expanding by 4% on average and oil activities expanding by 5.4%, bringing overall real growth to an average of 4.3%.

It said oil activities grew by 1.7% y/y in the first half of 2025, benefiting from the phase-out of OPEC+ voluntary production cuts starting in April 2025.

At the financial level, the fiscal deficit between 2025 and 2027 is projected to remain at an average of 3.8% of GDP.

Meanwhile, the current account balance slightly recovered, settling at 0.5% of GDP in the first quarter of 2025 against -2.6% in the second half of 2024.

The report said real GDP growth remained stable at 3.6% y/y in the first half of 2025, thanks to the stabilization of the oil sector and sustained non-oil growth.

Non-oil activities expanded by 4.8% over the period, in line with the performance of 2024 while non-oil growth was driven by the wholesale, retail trade, restaurants, and hotels sector (+7.5% y/y in the first half of 2025), consolidating the role of hospitality and tourism as engines of economic diversification.

The report also indicated that oil activities grew by 1.7% y/y in the first half of 2025, benefiting from the phase-out of OPEC+ voluntary production cuts starting in April 2025.

These trends are expected to persist in 2026-2027, with non-oil activities expanding by 4% on average and oil activities expanding by 5.4%, bringing overall real growth to an average of 4.3%.

Job Market and Inflation
The report said the labor market mirrors the stabilization of the real economy and is rapidly becoming more inclusive to women.

Overall unemployment decreased by 0.7 point between the first quarter of 2024 and the first quarter of 2025, with the female unemployment rate dropping from 11.8% to 8.1% over the same period.

Also, inflation remained low and stable in Saudi Arabia, settling at an average of 2.2% in the first half of 2025.

However, price increases have been concentrated in the housing and utilities sector as rental prices have become a key issue, largely because rental supply has failed to match demographic growth, especially in Riyadh.

While this reflects the government’s efforts to dynamize the Kingdom’s urban centers, the price increases prompted the government to freeze rental prices in Riyadh for the next five years, as anticipated increases in housing supply should help control rental prices.

Finally, the report said Saudi Arabia’s external position stabilized in the second half of 2024 and the first quarter of 2025.

Although net foreign direct investment has remained relatively stable, the World Bank has emphasized that recent changes in foreign ownership regulations in Saudi Arabia, coupled with continued structural reforms, are positive steps to attract greater flows of foreign direct investment (FDI).


Visa Relocates European Headquarters to London's Canary Wharf

FILE PHOTO: A drone view of London's Canary Wharf financial district, two days before the government presents its critical pre-election budget, in London, Britain March 3, 2024. REUTERS/Yann Tessier/File Photo
FILE PHOTO: A drone view of London's Canary Wharf financial district, two days before the government presents its critical pre-election budget, in London, Britain March 3, 2024. REUTERS/Yann Tessier/File Photo
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Visa Relocates European Headquarters to London's Canary Wharf

FILE PHOTO: A drone view of London's Canary Wharf financial district, two days before the government presents its critical pre-election budget, in London, Britain March 3, 2024. REUTERS/Yann Tessier/File Photo
FILE PHOTO: A drone view of London's Canary Wharf financial district, two days before the government presents its critical pre-election budget, in London, Britain March 3, 2024. REUTERS/Yann Tessier/File Photo

Visa is relocating its European headquarters to London's Canary Wharf financial district, the Canary Wharf Group said on Friday.

The firm is leasing 300,000 square feet on a 15-year term at One Canada Square, and is set to relocate from Paddington in the summer of 2028, the group added.

Canary Wharf Group, which runs the wider financial district and is co-owned by QIA and Canada's Brookfield, was hit hard by the pandemic-induced fall in office demand.

The area is now enjoying a rebound as more firms push staff to return to office, Reuters reported.

"Canary Wharf continues to attract a diverse range of global businesses. We are delighted to welcome Visa who have chosen the Wharf for their European headquarters as the best location to support their business growth," Shobi Khan, Canary Wharf Group CEO, said.

JPMorgan Chase last week unveiled a plan to build a tower in the Canary Wharf financial district that will contribute 9.9 billion pounds ($13.2 billion) over six years to the local economy - including the cost of construction - and create 7,800 jobs.

Qatar's sovereign wealth fund is revising plans for a revamp of its HSBC skyscraper in the east London district to retain more office space, Reuters reported in November.