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Fri 11 Nov 2011 10:26 AM

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Egypt's inflation hits four-year low on food prices

Pressure eases on gov't which came to power after soaring prices helped trigger uprisings

Egypt's inflation hits four-year low on food prices

Egyptian annual consumer price inflation hit a four-year low in October, easing pressure on the interim government which came to power on the heels of a popular uprising early this year that was triggered partly by soaring food prices.

Urban consumer inflation was 7.1 percent year-on-year in October, down from 8.2 percent in September, the state statistics agency CAPMAS said on Thursday, its lowest level since November 2007.

"Inflation was lower than our forecast 8.3 percent, mainly due to a month-on-month fall in food prices and a lower-than-expected increase in education fees," said Mohamed Abu Basha, an economist with EFG-Hermes.

"We expect that inflation has bottomed out and will go up again in November," he added.

Rising living costs and a widening rich-poor divide were seen as one trigger for the uprising in January and February that ended the three-decade rule of President Hosni Mubarak.

Slowing food price growth was mainly due to a decline in the cost of locally grown produce, especially rice, which fell 22 percent in September and October because of a good harvest, Abu Basha said.

Core annual inflation, which strips out subsidised goods and volatile items including fruit and vegetables, slipped to 7.50 percent in the year to October from 7.95 percent in September, the central bank said on its website on Thursday.

The urban consumer price index for October was 119.2 versus 111.3 a year earlier, CAPMAS said.

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