Egypt’s annual consumer price inflation plunges to 12.8% in Feb
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Egypt’s annual urban consumer price inflation plunged to 12.8 per cent in February from 24.0 per cent in January, decelerating even faster than analysts had expected, data from statistics agency CAPMAS showed on Monday.
Due to the base effect, the exceptionally high price increases of the last two years are no longer being reflected in the statistics, analysts said.
Fifteen analysts polled by Reuters last week had expected inflation to cool to a median 14.5 per cent.
Month on month, prices were 1.4 per cent higher in February than in January.
Food and beverage prices were up by an annual 3.7 per cent after rising 0.2 per cent from January.
Inflation had been climbing since early 2022 following the Russian invasion of Ukraine, which prompted foreign investors to withdraw billions of dollars from Egyptian treasury markets.
Headline inflation reached a record high of 38.0 per cent in September 2023.
The price rises were fuelled in part by rapid growth in the money supply. M2 money supply expanded
by an all-time high of 32.1 per cent in the year to end-January, central bank data showed.
Egypt a year ago sharply devalued its currency, raised interest rates by 600 basis points and signed an $8 billion financial support package with the International Monetary Fund, helping to bring its finances under control.
Egypt’s annual urban consumer price inflation decreased to 12.8 per cent in February from 24.0 per cent in January, data from statistics agency CAPMAS showed on Monday.
Egypt’s annual urban consumer price inflation plunged to 12.8 per cent in February from 24.0 pct in January, decelerating even faster than analysts had expected.
Due to the base effect, the exceptionally high price increases of the last two years are no longer being reflected in the statistics, analysts said.
Fifteen analysts polled by Reuters last week had expected inflation to cool to a median 14.5 per cent.
Month on month, prices were 1.4 per cent higher in February than in January.
Food and beverage prices were up by an annual 3.7 per cent after rising 0.2 per cent from January.
Inflation had been climbing since early 2022 following the Russian invasion of Ukraine, which prompted foreign investors to withdraw billions of dollars from Egyptian treasury markets.
Headline inflation reached a record high of 38.0 per cent in September 2023.
The price rises were fuelled in part by rapid growth in the money supply. M2 money supply expanded by an all-time high of 32.1 per cent in the year to end-January, central bank data showed.
Egypt a year ago sharply devalued its currency, raised interest rates by 600 basis points and signed an $8 billion financial support package with the International Monetary Fund, helping to bring its finances under control.
Egypt’s inflation rate plunged by almost half in February, as the effects of a foreign-currency crunch that fed a black market for dollars a year before finally wore off.
Consumer prices in urban areas grew an annual 12.8 per cent last month versus 24 per cent in January, Egypt’s main statistics body said Monday. It was the lowest level since March 2022, according to data compiled by Bloomberg, about the time the North African country plunged into a financial crisis.
The drop was widely expected due to a favorable comparison with the elevated inflation figure of February 2024, when many Egyptian businesses were resorting to buying dollars at exorbitant rates from the local black market and passing along the cost to consumers at the tills. Most economists predict the inflation rate will keep falling through 2025. The data is the latest sign of a turnaround for Egypt’s economy after authorities let the pound tumble 40 per cent against the dollar and hiked interest rates to a record to secure overseas financing last March. The moves, made possible by a landmark investment from the United Arab Emirates, helped Cairo more than double its International Monetary Fund loan programme, part of a vast global bailout worth some $57 billion.
Food and beverage prices, the largest single component of the inflation basket, climbed just 3.7 per cent in February compared to 20.8 per cent in January. On a monthly basis, consumer prices increased 1.4 per cent versus 1.5 per cent.
The slowdown gives Egypt’s central bank more leeway to finally begin a long-awaited monetary-easing cycle at its next policy meeting on April 17. The regulator has held interest rates for seven consecutive gatherings.
The most populous Middle Eastern country last cut rates at the height of the coronavirus pandemic in 2020. A reduction would help ease repayments of Egypt’s high debt burden — one of the region’s largest — and let it press ahead with plans for a consumer-led economic revival that’s supposed to empower the private sector and boost local export industries.
