ALBAWABA – Inflation in Egypt soared at the fastest growth rate in June since December 2009, according to figures released Monday by Central Agency for Public Mobilization and Statistics (CAPMAS).
Inflation in Egypt’s urban parts sped sharply in June, to an annual rate of 35.7 percent, from 32.7 percent in May, CAPMAS figures showed.
On a monthly basis, the June inflation rate in Egypt declined to 2.1 percent from 2.7 percent in May.
The rise in annual consumer prices was fueled largely by a 65.9 percent increase in food and beverage costs, Bloomberg reported.
The country is working to secure a $3 billion deal with the International Monetary Fund and has devalued the Egyptian pound three times since March 2022. The latest devaluation was in January 2023, and the pound has been stable since then.
The devaluation helped drive up the cost of most imported goods and hindered government efforts to cut spending as it battled its worst foreign-currency crisis in years, according to Bloomberg..
Egypt’s government recently raised the prices of some subsidized commodities such as rice and sugar. President Abdel-Fattah el-Sisi warned recently that the nation would not be able to bear more cost increases. His statements are widely interpreted as an attempt to downplay expectations of another devaluation any time soon.
Inflation has been a key concern for the central bank. Even though the bank’s Monetary Policy Committee last month left interest rates unchanged at a level far below inflation.
The central bank set its target price inflation rate at 7 percent, plus or minus 2 percentage points, by the fourth quarter of 2024.
Central bank Governor Hassan Abdalla earlier this year suggested higher rates could do little to contain price growth that he described as stoked mainly by supply issues.
The committee is slated to meet next on August 3.
Bloomberg’s economists say that authorities are working to build up a sufficient foreign-currency buffer before enacting another devaluation. The government with then be moving to what they’d pledged would be a market-determined exchange rate.
