Cost of living in Syria spirals out of control

Inflation has soared in Syria as fighting intensifies, making life harder for civilians caught in the crossfire. Published in MEED, 14 February 2013

Very little economic information is being released by the Syrian authorities these days. It is not clear if that is because Damascus does not want to publicise how much the country is suffering, or because it is simply impossible to gather all the raw data needed. Either way, it means analysing the economic impact of the ongoing crisis there has become increasingly difficult.

But among the limited statistics that are still being published are regular inflation figures and they offer some insight into the problems that are now facing the country and its people. It is clear from the monthly inflation figures, which are published by the Central Bureau of Statistics, that the economy is being squeezed more and more the longer the fighting carries on.

Crisis-fuelled inflation

Over the recent past, Syria has had a good record when it comes to managing inflation. According to the Washington-based IMF, the average rate in 2000-06 was 3.8 per cent, which was well below the regional average of 5.9 per cent. In most years since then it has remained relatively low, although there was a spike in 2008. During that year, inflation rose as high as 20 per cent because of higher global food and fuel prices, although it declined in the final quarter to average 15.2 per cent for the year. Since the outbreak of social unrest, the IMF has halted its assessment of inflation in Syria.

The Syrian uprising dates back to early March 2011, when a group of boys were arrested for writing graffiti critical of the regime on walls in the southern city of Daraa. That led to protests calling for their release, which morphed into demands for regime change around the country. Despite the growing unrest that year, however, inflation remained fairly low. There is no data available for December 2011, but in November that year the annual inflation rate for Syria was 5.8 per cent.

The highest rates for the year were seen in the Rural Damascus governorate, where it reached 8.4 per cent; Aleppo governorate, where it was 7.5 per cent and Quneitra governorate, where it was 7 per cent. Given that the IMF estimate for average inflation across the Middle East and North Africa region that year was 9.8 per cent, it can be counted as a good performance.

Since then, however, the pressures have been mounting on the economy and the inflation rate has been creeping up each month. In January 2012, the annual change in the consumer price index (CPI) was 15.7 per cent. That rose to 21.3 per cent the following month and then above 30 per cent in March. The increases were less dramatic in the five months that followed, although it still continued to climb every month. The figures for September 2012, the most recent available, show another large spike. From an inflation rate of 39.5 per cent in August, it rose to 48.1 per cent in September.

All areas of the country have been affected, but some governorates have been hit harder than others. In the north of the country, Aleppo has been suffering from the highest inflation rate. Prices there rose by 47.6 per cent in the 12 months to August 2012, at least 7 percentage points higher than the second-worst region, Deir al-Zour. In September, it accelerated further in Aleppo to reach 64.6 per cent, suggesting problems regarding the supply of certain goods and services there.

The comparable figure for Damascus that month was 41.2 per cent, which is below the average for the country as a whole. Perhaps surprisingly, it is the southern governorate of Daraa, which provided the wellspring for the revolution, that has suffered the least. The annual inflation rate there was 40.9 per cent in September 2012. That is still a high figure but, as far as local residents are concerned, it is at least lower than in any other part of the country.

Food inflation

There have also been some notable trends in terms of specific commodities. Food represents the single largest element of the CPI, accounting for 44 per cent of its total value. In the first year of the uprising, food prices increased by 25.8 per cent, a slightly quicker rate than the overall inflation rate of 21.3 per cent. The cost of dairy products, seafood, meat and bread rose 26-45 per cent, while fruit and vegetable prices increased 16-17 per cent.

The cost of beverages rose more rapidly, with alcohol seeing the highest increase of any category of goods, at 60.5 per cent for the 12 months to February 2012. Non-alcoholic beverages were up 53 per cent. Both are small contributors to the CPI figure, however. Alongside the rising food and drink prices, there were other pressures on Syrians. Housing costs rose over the first 12 months, increasing by more than 40 per cent in the governorates of Aleppo, Damascus and Tartous, and by 30 per cent in Lattakia. Electricity, gas and fuel prices were up by about 11 per cent across the country, and by almost 17 per cent in Tartous and Lattakia.

Since then the situation has deteriorated further. In the 12 months to September 2012, food prices increased by an average of 45.5 per cent across Syria, with the Aleppo governorate particularly affected. It saw a rise of 66.2 per cent in the overall price of food, including a 63 per cent rise in the price of fruit, a 96 per cent increase for bread and a 99 per cent rise for vegetables.

Worsening situation

Housing costs also appear to be rising fast, with an increase of 54 per cent in the Damascus governorate and a 53 per cent hike in Aleppo. Electricity and fuel prices increased by 124 per cent in the year to September 2012. Here too, Aleppo has been the worst affected, with price increases of 180 per cent over the period, followed by 137 per cent in Al-Hasakeh in the far northeast of the country and 132 per cent in Deir al-Zour.

Overall, food is 48 per cent more expensive in Syria than it was before the uprising began, while electricity, gas and fuel have doubled in price. The only area that appears to have largely escaped inflation is communications, where the costs have risen by just 4.5 per cent.

It is not just events within Syria that are directly affecting prices. International sanctions placed on the country mean trading with other states has become far more difficult and the cost of imported goods is likely to have risen accordingly.

All these statistics do not provide an entirely accurate picture of what is happening on the ground. The price of electricity may have risen sharply, but that is irrelevant if regular power cuts mean people are not able to switch on a light or an oven, even if they could afford to do so. If they have been made homeless because of the unrest then it is even less relevant.

In many cases, food and fuel is not available, at least not in the quantities required. The World Food Programme, a division of the UN, says there are shortages of bread and fuel in many parts of the country. It is currently helping to deliver basic supplies to some 1.5 million people a month across all 14 governorates in Syria.

Millions homeless

Overall, the UN estimates some 2 million people are internally displaced and up to 4 million are in need of help. The tough winter weather at the start of this year will have worsened their plight – in January, Syria suffered freezing conditions and snow blanketed Damascus and many other governorates.

Given the low or nonexistent control that the regime wields in some parts of the country, it is also not clear how accurate the pricing data it publishes can be. In addition, these inflation figures do not cover the past six months, when fighting has intensified in many areas, notably Aleppo and Damascus. That will have put greater pressure on Syria’s economy, making it more dangerous and expensive to transport goods around the country, and almost certainly leading to a further acceleration in inflation.