A poll conducted by Reuters showed, on Tuesday, that the inflation rate in Egypt is expected to decline in October, from a record high of 38 percent in September, with food prices rising moderately, but analysts say that the end of Egypt’s battle with inflation is still… 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.
“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 from mid-October 2023, while exempting them from customs duties,” said Ralph Weigert, from Standard & Poor’s.
“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.
On Friday, the government announced increases in gasoline prices of up to 14.3 percent, amid rising global prices and a weak exchange rate.
HSBC Bank said in a research note, “The weakness of the pound in the parallel market indicates broader upward pressures on domestic prices in the future, and (the rise in domestic 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 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 Gaza crisis on October 7.
“In our view, this will likely keep real interest rates in deeply 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 next Thursday.
2023-11-07 16:40:27
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