The expectations of analysts and experts varied regarding the inflation rate in Egypt for the month of October, which is expected to be released on Thursday in light of the continued rise in prices, which raised inflation to a record level of 38 percent in September, as a result of the scarcity of the dollar and the rise in global commodity prices. And shortage of supply.
One team believes that there are government efforts to contain inflation, by offering some basic commodities at reduced prices, while another team believes that the continued rise in prices will raise the inflation rate to new record levels. However, the two teams agreed that controlling inflation in Egypt is still a long way off. .
Heba Mounir, a macroeconomic analyst at HC Investment Company, expected inflation to continue rising by 2.6 percent on a monthly basis and 38.0 percent on an annual basis in October, similar to September’s numbers.
She attributed this to “the shortage of supplies of basic goods and products as a result of restricting the import and export of some agricultural crops, the shortage of supply of hard currency, and the seasonal effect of the beginning of the academic year in schools and universities.”
While an opinion poll conducted by Reuters regarding inflation expectations in Egypt showed that the inflation rate in Egypt is expected to decline in October, with food prices rising moderately, but the agency also indicated that analysts say that the end of Egypt’s battle with inflation will be… It seems far away.
The average forecast of 19 analysts surveyed showed annual urban consumer inflation falling to 37.1 percent from 38.0 percent in September.
Inflation has accelerated steadily since June, when it reached a record level of 35.7 percent. The previous record high of 32.95 percent occurred in July 2017.
Ralph Weigert of Standard & Poor’s said: “The slight decline in the inflation rate from last month is likely supported by the decision to reduce retail prices of some basic food items for a period of six months, starting from mid-October 2023, while exempting them from customs duties.” “This is likely to help contain inflationary pressures temporarily,” he added.
In its fight against inflation, the government announced on October 10 that it had agreed with private sector producers and retailers to reduce the prices of beans, lentils, dairy products, pastries, rice, sugar, chicken and eggs by between 15 and 25 percent for six months.
However, last Friday, the government announced increases in gasoline prices of up to 14.3 percent amid the weakness of the pound against the dollar.
HSBC said in a research note: “The weakness of the pound in the parallel market indicates broader upward pressures on local prices in the future, and the rise in local fuel prices on November 3 will increase these pressures.”
The Egyptian currency was allowed to fall by about half against the dollar in the year ending in March 2023, but it has remained stable since then, despite Egypt’s pledge to the International Monetary Fund to adopt a flexible exchange rate.
The currency, whose official price is 30.85 pounds to the dollar, fell to about 48 pounds to the dollar, down from 40 pounds in the parallel market before the outbreak of the Israel-Hamas war on October 7.
“In our view, this will likely keep real interest rates in strongly negative territory in the coming months,” HSBC said.
After raising interest rates in August to contain inflationary pressures, the central bank left interest rates steady at its meetings on September 21 and November 3. Despite increases of 1,100 basis points since March 2022, the lending rate of 20.25 percent is still well below inflation.
An average of five analysts surveyed expected core inflation, which excludes fuel and some volatile food items, to fall to 37.2 percent from 39.7 percent in September.
The Central Agency for Public Mobilization and Statistics and the Central Bank are scheduled to release inflation data for October on Thursday.
2023-11-08 15:31:33
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