Egypt inflation climbs to 7.3% in Jan from 5.9% in Dec

Cairo, February 10

Egypt’s annual urban consumer price inflation quickened to 7.3% year-on-year in January, it’s highest since August 2019, from 5.9% in December, data from the country’s statistics agency CAPMAS showed on Thursday.

Prices climbed 0.9% month-on-month compared to a 0.08% drop in December, the agency said.

The annual rate puts inflation near the higher end of the 5-9% target range set by the central bank, which kept its key interest rates unchanged during a regular monetary policy committee meeting on Feb. 3.

The headline inflation number reflected “unfavourable base effects and rising food prices,” EFG Hermes’s Mohamed Abu Basha said in a note. “Monthly inflation trends showed food inflation jumped 2.1%, reflecting a broad increase in most food items.” Inflation dynamics nonetheless remain weak in the absence of demand pressures, he wrote.

“We therefore expect the acceleration in the headline number not to push the Central Bank of Egypt (CBE) to hike rates in the near term, though we are clearly seeing rising risks,” Abu Basha said.

Egypt’s economy has bounced back since the worst of the coronavirus pandemic. Gross domestic product shot up by 9.8% year-on-year in the July-September quarter, up from 0.7% a year earlier, planning ministry data showed. Reuters