Inflation in Egypt’s urban areas climbed to its fastest level since November 2018, driven by high food costs.
Consumer prices climbed 14.6 percent from a year earlier in August, versus 13.6 percent the previous month, the state-run statistics agency CAPMAS said on Thursday.
Food and beverage costs, which make up the largest single component of the inflation basket, jumped 23.1 percent, Bloomberg said.
On a monthly basis, price growth slowed to 0.9 percent from 1.3 percent in July.
“Inflation in Egypt is likely close to peaking after a run-up in food and energy costs that followed Russia’s invasion on Ukraine and the pound’s devaluation in March,” Bloomberg said adding, while the government increased fuel prices in July, bread subsidies remain unchanged for now.
Due to the increase in price gains, Egypt’s interest rates became negative when adjusted for inflation, weakening Egypt’s appeal to foreign investors in domestic bonds and bills.
“The country has seen some $20 billion foreign outflows from its local debt market this year,” Bloomberg said.
The central bank will meet on September 22, under the leadership of acting Governor Hassan Abdalla, after replacing Tarek Amer, post his resignation last month.
“The Monetary Policy Committee (MPC) has kept interest rates unchanged for two meetings and previously described deviations of prices from its target as transitory,” Bloomberg said adding the quick price increases will be temporarily tolerated by the committee, “relative to its target of 7 percent, plus or minus two percentage points, on average in the fourth quarter.”
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