The Development of Inflation in Lebanon – The Causes and Impacts on the Country's Economy

Lebanon, the former ‘Switzerland of the Middle East’, is enduring an unprecedented economic meltdown, battling several overlapping crises simultaneously. Yet it faces another serious problem – hyperinflation. The consumer prices of goods and services escalated by hundreds or thousands of percent, and the annual inflation rate surged to 154% in 2021. This bachelor’s thesis aims to evaluate the development of the inflation in Lebanon, focusing on the recent period from 2019 to the present day. For this purpose, I formulated two research questions: What are the primary causes of high inflation in Lebanon? And what impacts does it have on the Lebanese economy? The key findings suggest that the build-up of inflation is rooted in strong dependency on massive dollar inflow and a lack of adequate economic policies. Furthermore, the results show a significant increase in retail prices across all categories, accompanied by real income decline and deterioration of purchasing power. Additionally, my research outcomes confirmed that a rise in inflation induces an increase in poverty.