Fear and loathing in Damascus: 'Why are they doing this? Why are they trying to starve us?'

In a bazaar in central Damascus a young man approaches, clearly agitated, maybe even angry. "Here, look at this," he says. "This is for Syria."

Around his neck in Arabic script is a bold, five-inch long tattoo, so fresh that his skin is still healing. It is simply a name: "Bashar al-Assad".

The regime under whose rule Syria is steadily disintegrating still has plenty of supporters in Damascus. But few people have either the time or money for making such designer statements of defiance in this war.

As more and more of the outer suburbs are pulverised by shelling, people are retreating into an ever-shrinking, increasingly overcrowded central zone of the city. Here, more than 50 per cent are unemployed and existence for many has been reduced to a daily struggle to obtain food, whose prices are beginning to spiral out of control.

Iamad Assi, an electrician, is typical. Already homeless because of fighting in his own suburb of Al-Amleha, in the north-east of Damascus, he has moved in with relatives in the Old City, bringing his wife and two children with him. Few shells land here, but there is no prospect of working his trade now and the price of feeding his family is driving him out of the country altogether.

"Once the school year is done that's it. We'll go to Lebanon and stay with friends there. Perhaps I can work over there. It is impossible here and things are only getting worse."

He takes me through the basics of living here, how everything from fuel for heating and cooking through to the basic foodstuffs has increased several hundred per cent.

Chamber of Commerce figures chart the everyday misery of war for Damscenes still in their homes or displaced by the fighting. Since March 15 2010, when the war began, the price of a kilo of tomatoes – a staple of Syrian cooking – has increased by more than five times, to the equivalent of £1.35 at the official exchange rate.

Bread has long been subsidised in government bakeries, but because of the influx of displaced people and the disruption to warehousing and transport caused by fighting, there are shortages and the queues are immense.

In private bakeries, even with the benefit of subsidised flour and gas for cooking, the price of bread has trebled during two years of war. Sugar and rice have gone up 200 per cent and 260 per cent respectively.

A system of government coupon books that allowed families to obtain sugar and rice more cheaply is back in use again – having been all but abandoned as prosperity grew before the rebellion began.

The price of gas for cooking on has also shot up: it has doubled in the state-subsidised sector and has risen even further, to £28 a cylinder – enough for four to five weeks – outside that.

At one government distribution point on a major street, people were angry to see a British television crew as they queued with coupon books – something I've not encountered before in the capital, shouting: "Go! Get out of here!"

A middle-aged man shouted in English: "You are not welcome. You are starving us. You are stopping us living here. You should report this. It is the sanctions. Go home."

It was a shock, in a country whose hospitality to foreign strangers is renowned. He would not shake hands. It was not the fighting that angered this businessman, nor the British government's apparent wish to arm the rebels, but the EU sanctions that are preventing the transfer of money.

His views were echoed by the manager of a factory making chewing gum – itself a sight verging on the surreal, with bullet holes in its windows, gaps in the walls where mortar shells have exploded, and a roof peppered with the jackets of automatic weapon rounds. Despite being located in the middle of what appears to be a free-fire zone, fought over by rebels and Syrian army alike, it is still managing to process huge vats of pink and green goo into the product that both rebels and army soldiers enjoy.

"The sanctions are a huge problem," said Abu Adham. "They affect prices enormously and also affect the sources of all our raw materials. Sometimes we can find alternatives but it is not easy and we have had to discontinue certain of our lines."

As the scent of sugar hung, heavy in the air, the rumble of not-so-distant shelling continued. Mr Adham's staff face potentially lethal struggles just to get here and there is an ever-present threat of kidnapping. "But we must continue," Mr Adham said. "Two hundred people depend upon work here. We must go on somehow."

At the bazaar in the Old City, fruit seller Fadil al-Bash said he knew just who to blame. "Prices go up because only last week the rebels attacked the wholesale market. They killed five traders. It's crazy. Why are they doing this? Why are they trying to starve us? This is not a military target."

But ask most people on the streets and they shrug. These days it's better to plead ignorance about why the economy is melting down, as you never know who might overhear you if you start blaming people.

The cause of much disruption is indisputable. Damascus's oil, petrol and diesel comes largely from a refinery to the west of Homs, 100 miles north. Road tankers are regularly attacked, as is the pipeline that connects the refinery to the capital. The highway south to Jordan is also increasingly exposed to rebel attacks. The only unaffected road out, either for people or for freight, is westwards to Lebanon.

There are long queues of cars for the few petrol stations still operating in Damascus, which are themselves targets for incoming mortars or even car bombs. People line up for fuel, tempers easily fraying, and the smell of petrol hangs heavy in the air as jumpy soldiers push people back and try to maintain order.

"I am seeing 30 years of economic planning fall apart before my very eyes," said Elaine Imadia, shopping for fruit and vegetables with her daughter. A resident of the city for 53 years, she still has the drawl she acquired growing up in Palisades, New York. Her husband, Mohammed Imadi, is a former economy minister and a founder of Syria's stock exchange.

"Prices have trebled and I really do not know how the poor people are managing right now," she said. "The entire economy is being dismantled. Look around you here – the price of meat is unspeakably high and that's just the beginning of it all."

In fact you didn't need to look far to see how the poor people are managing. They are doing something which is commonplace on the streets of London and New York – but until now has been a rarity in Damascus. A middle-aged woman sat at the street corner, quietly begging from passers-by.

Alex Thomson is Chief Correspondent for Channel 4 News