Egypt annual headline inflation increases slightly, monthly rate jumps in August: CAPMAS

Ahram Online , Tuesday 10 Sep 2024

Egypt’s annual headline inflation slightly increased in August to 25.6 percent, up from 25.2 percent in July, while the monthly headline inflation jumped to 1.9 percent, up from 0.5 percent in July, the Central Agency for Public Mobilization and Statistics (CAPMAS) announced Tuesday.

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

However, the annual headline inflation decreased this August compared to August 2023, when it recorded 39.7 percent.

Egypt's annual urban consumer price inflation rate unexpectedly accelerated to 26.2 percent in August, up from 25.7 percent in July, for the first time in five months.

CAPMAS attributed the increase in the headline annual inflation mainly to the hike in prices of vegetables (by 14.3 percent), transport services package (by 14.9 percent), post services (by six percent), ready-made garments (by 1.2 percent), shoes (by 1.5 percent), and healthcare services (by 2.8 percent).

On the other hand, some commodities decreased, such as poultry and meat (by 1.5 percent), cereals and bread (by 1.3 percent), oils and fats (by 0.9 percent), and sugar and sugary foods (by 0.1 percent).

CAPMAS’ figures show a significant spike in prices of commodities and services in August 2024 compared to August 2023.

Accordingly, prices of food and drinks jumped in August by 28.1 percent; alcoholic beverages and smoking by 37.6 percent; clothes and shoes by 25.4 percent; transportation by 29.8 percent; culture and entertainment services by 49.7 percent; electricity, fuel, and water by 12.5 percent.

Nevertheless, Egypt's annual headline inflation rate exhibited a downward trajectory reaching 25.2 percent in July, down from 27.1 percent in June, marking a 1.9 percent decline, according to CAPMAS.

Meanwhile, the annual core inflation rate declined to 24.4 percent in July, compared to 26.6 percent in June, marking its lowest point since December 2022.

The Central Bank of Egypt (CBE) has set the inflation target at seven percent (±2 percent) in the fourth quarter (4Q) of 2024.

During its last meeting held in September, CBE projected the inflation rate to decline in the 1Q of 2025 due to the cumulative impact of monetary tightening policies.

The central bank also anticipated that inflation might increase due to the declining global oil supplies, escalating regional geopolitical tensions, and uncertainty about protectionist trade policies.

In addition, the CBE has raised the key interest rates by eight percent (800 bps) since January, bringing the total hikes it has applied since March 2022 to 19 percent (1900 bps).

On Thursday, it kept the overnight deposit rate, overnight lending rate, and the rate of main operations unchanged at 27.25 percent, 28.25 percent, and 27.75 percent, respectively.

According to BMI Research, inflation in Egypt is anticipated to fall below 20 percent by February 2025, primarily due to a significant base effect.

Containing inflation and putting it on a downward path is one of the top priorities Egypt has committed to working on under its $8 billion loan programme with the International Monetary Fund (IMF).