Lebanon's CPI inflation retreated to a three-year low of 1.3% y/y in August 2013 from 2.0% the month before on slower housing costs and shrinking transport and clothing prices which offset rising food charges, data from the statistics office CAS showed. Rent costs fell to zero from a record high 44.1% increase in H1, also helping curb the CPI.

It is worth noting that labour unions have accused the government of reporting lower CPI data to curb rising demand for wage hikes. The office has not published CPI data for the first five months of 2013 due to allegedly technical and administrative reasons.

In monthly terms, the CPI rose 0.2% m/m in August compared with a zero growth in July.

Food and non-alcoholic beverage prices (20% of basket) grew 0.8% m/m in August on higher fresh produce costs, lifting the annual increase to 2.4% y/y from 1.9% in July. Rent costs flattened in annual terms compared with a 44.1% y/y growth in H1 despite sustained demand from Syrian families fleeing to Lebanon. The market, thus, seems to have absorbed the record increase in rent charges. Utility prices rose 2.4% y/y in August, the same as the month before.

Transport prices grew 1.4% m/m in August as the government upped fuel costs in line with its monthly price scheme which depends on oil prices. The component’s annual deflation, however, deepened to 2.5% y/y from 0.4% a month earlier. Education prices rose 14.6% y/y, the same as a month earlier. Clothing and footwear costs dropped 3.5% m/m in August on seasonal discounts, deepening the annual deflation to 10.0% y/y from 6.7% the month before.