A poll conducted by Reuters showed that inflation in Egyptian cities is expected to grow again in July, after reaching an all-time high in June, with food prices continuing to rise.
The median forecast of 15 analysts who participated in the survey showed annual urban consumer price inflation rising to 36.5 percent in July from 35.7 percent in June. The previous highest level was recorded in July 2017 and reached 32.95 percent.
Capital Economics, which expects prices to rise 36.7 percent annually, said inflation in non-food items was likely to have risen as a result of the depreciation of the pound.
“However, food is likely to be the biggest driver in July, especially wheat and sugar, which have risen in price. The price of sugar has risen 24 percent in one month,” James Swanston of Capital Economics said in a note.
The pound has fallen by about 50 percent since March 2022, after the Ukrainian crisis revealed weaknesses in the Egyptian economy.
In December, the International Monetary Fund approved a $3 billion loan to Egypt under the Extended Fund Facility, to be disbursed over 46 months. However, the first review of this program was postponed amid uncertainty about Egypt’s commitment to transition to a flexible exchange rate.
“It is likely that the relative stability in the parallel exchange rate over the past few weeks has helped stabilize prices in other parts of the CPI basket, but price pressures are still evident in certain categories with the increase (influx) of tourists,” Goldman Sachs said.
The average forecast of four analysts showed that the core inflation rate, which excludes fuel and some volatile foodstuffs, rose to a record 41.25 percent in July from 41 percent in June, also a record.
Seeking to contain inflationary pressures and inflation expectations, the central bank raised its key overnight interest rate by 100 basis points on Aug. 3, bringing the deposit yield rate to 19.25 percent. Since March 2022, the bank has raised interest rates by 1,100 basis points.
2023-08-09 06:24:54
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