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Egyptian inflation rates fall to lowest levels in almost 2 yrs

Reuters , Tuesday 10 Apr 2018
Egypt’s annual urban consumer price inflation fell to 13.3 percent in March 2018, from 14.4 percent in February. (Photo: Reuters)
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 Egypt's inflation rates fell in March to their lowest levels in almost two years, paving the way for more interest rate cuts in the wake of a 2-percentage-point decline since February.

Inflation climbed after Egypt devalued the pound in November 2016, reaching a record high of 33 percent in July 2017 following energy subsidy cuts. It has gradually eased since, prompting the central bank to begin loosening monetary policy.

Annual urban consumer price inflation eased to 13.3 percent in March from 14.4 percent in February, its lowest rate since May 2016, the official statistics agency CAPMAS said on Tuesday.

Core inflation, which strips out volatile items like food, fell to 11.59 percent year-on-year in March from 11.88 percent in February, its lowest rate since April 2016, the central bank said on Tuesday.

Hany Farahat, senior economist at CI Capital, said the drop was positive and in line with central bank expectations.

"Although it's not a steep fall from the previous month, it still leaves room for further monetary easing in my view."

In an attempt to combat soaring inflation, the Egyptian central bank raised key interest rates by 700 basis points after it devalued the currency. It has cut the rates by 200 basis points since February as inflation eased. 

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