New Consumer Price Index estimates for Syria reveal further economic deterioration and alarming levels of humanitarian need

A regression analysis to understand the correlation between the market exchange rate of the Syrian pound against 1 USD, and the general CPI

From:
Foreign, Commonwealth & Development Office
Published
28 January 2020
Country:
Syria
Document Type:
Briefing
Theme:
Governance and Conflict
Authors:
Turkmani, R and Mehchy, Z

Abstract

Highlights

  • According to our new estimate, food and beverage prices in Syria rose by a factor of 20 since 2010. Half of that increase took place during 2019.

  • Taking 2010 as the base year, our analysis puts the Consumer Price Index (CPI) in Syria in January 2020 at 1676 points. This means that the prices of general goods and services increased almost 17 times.

  • Our analysis demonstrates a strong correlation between CPI and the Syrian pound exchange rate against the USD. The recent banking crisis in Lebanon, which is a main source of Syria’s hard currency, had a strong impact on the Syrian pound exchange rate and subsequently on the prices of most goods, particularly food.

  • Food prices increased 60% since September 2019 when the FAO estimated that 6.5 million Syrians are food insecure and cited the high food prices as main reason, meaning that a higher number of people are now severely food insecure and that the number will continue to surge with the increased exchange rate bringing a considerable part of the population to the brink of famine due to ‘failure of exchange entitlement’.

  • The general CPI has increased 215% since the end of 2017 when 90% of the population in Syria was estimated to be living under the poverty line.

  • Mitigation measures by the government to control the exchange rate had a short-term impact but are not expected to sustain currency appreciation.

  • Syria response policies, humanitarian and non-humanitarian need to urgently factor in these changes and the increased risks. Continued humanitarian support without addressing the state of the economy is not sustainable. There is a need for a comprehensive economic rescue package that is tightly linked to the political process.

  • The impact of devaluation and increased CPI also impacts the northeast and west of Syria in areas outside of government control where the Syrian pound is still the main currency in use.

This work is part of the Conflict Research Programme managed by the London School of Economics and Political Science (LSE) and funded by the UK Department for International Development

Citation

Turkmani, Rim and Mehchy, Zaki (2020) New Consumer Price Index estimates for Syria reveal further economic deterioration and alarming levels of humanitarian need. Conflict Research Programme, London School of Economics and Political Science, London

New Consumer Price Index estimates for Syria reveal further economic deterioration and alarming levels of humanitarian need (PDF, 686KB)

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Published 28 January 2020
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