Egypt headline annual inflation cools off again in April

Doaa A.Moneim , Thursday 9 May 2024

Egypt’s headline inflation rate decelerated, for the second consecutive month, in April to 32.8 percent, down from 33.1 percent in March, the Central Agency for Public Mobilization and Statistics (CAPMAS) announced Thursday.

File Photo: A woman buying Fruits from a street vendor. AFP


Egypt’s annual headline inflation rate reached a record level of 36 percent in February, before cooling to 33.1 percent.

CAPMAS attributed the decline to the decrease in the prices of bread and cereals by 3.7 percent; poultry and meat by 1.8 percent; oils and fats by 2.5 percent; and other food staff by 5.7 percent.

The government has recently applied measures to reduce the soaring prices of some food items.

This came in response to the decline in imported items' prices and the abundance of foreign exchange in the country emerging from the proceeds of the Ras El-Hekma deal and other finances that helped release the goods piled in the ports.

According to the Egyptian cabinet’s data, Egypt has cleared goods amounting to over $14.5 billion since January.

However, CAPMAS’ figures show that other commodity groups witnessed a spike in April, including the dairy group by 0.6 percent; fruits by 3.5 percent; vegetables by 0.3 percent; sugar and sugary food by 0.9 percent; coffee, tea, and cocoa by 0.6 percent; tobacco by 8.6 percent; fabrics by 1.7 percent; and ready-made clothing by 6.7 percent.

CAPMAS added that prices of food and beverages have spiked by 37.6 percent, healthcare services by 26.6 percent, and furniture and home appliances by 33.4 percent, annually.

In April, the International Monitory Fund (IMF) expected Egypt’s inflation rate to remain high over the short term, before descending to 25 percent in FY2024/2025, which starts 1 July, and shrinking further to 15 percent by the end of that fiscal year.

Egypt targets to bring down the inflation to seven percent (±2 percent) in the fourth quarter of 2024, under its $8 billion loan programme, as set by the Central Bank of Egypt (CBE).

CBE’s Monetary Policy Committee is scheduled to convene on 23 May to review the key interest rates in light of the latest macroeconomic developments locally and globally, particularly the inflation rates. This meeting is the last for FY2023/2024.

Since February, the CBE has raised the key interest rates by eight percent (800 bps) to tame inflation.

The US-based investment bank Goldman Sachs projected the CBE to cut the key interest rates in May by two percent (200 bps), based on its view of inflation decreasing to 20 percent by the end of 2024, according to a research note published in April.

The US Federal Reserve, on a global level, kept the benchmark interest rates unchanged for a sixth straight meeting to stand at a 23-year high to counter price spikes.

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