Egypt's urban inflation rose by 3.1 percent in July, representing the highest monthly increase since May 2008 due to price hikes of strategic commodities, announced the statistical body CAPMAS on Sunday.
The governmental body attributed the rise to hikes in the cost of transportation (up 11 percent), reflecting an increase in fuel prices that went into effect in early July.
The government raised petrol prices in an attempt to trim the budget deficit in the fiscal year 2014/15, with the price of lowest-value octane 80 fuel rising 78 percent and the cost of diesel rising 64 percent.
Octane 80 increased by LE0.7 to LE1.6 per litre, octane 92 rose by LE0.75 to LE2.6 per litre and diesel rose to LE1.8 per litre.
The higher cost of fuel has affected other commodities' prices, known as a second-round effect, a Cairo-based economist told Ahram Online.
Accordingly, vegetables also witnessed a price rise of 7.4 percent, fruit prices rose 3 percent and prices of dairy products and eggs upped 4.6 percent.
High electricity prices – up by 28 percent – have also contributed to inflation's upward movement, CAPMAS added.
The electricity ministry announced higher tariffs in July for households with a rise per kilowatt/hour varying from LE0.02 to LE0.07 for different consumption segments.
According to CAPMAS, the urban consumer price index (CPI) hit the highest rise in seven months, leaping to 10.6 (150.4 points) in July as compared to 10.3 percent in the same month last year.
Egypt's headline CPI rose 3.3 percent month-on-month in July. Meanwhile, year-on-year headline inflation reached 10.7 percent to record 153.7 points.
By mid-July, Egypt's Central Bank (CBE) had raised the overnight deposit rate, overnight lending rate and the rate of the bank's main operation by 100 basis points to 9.25 percent, 10.25 percent and 9.75 percent, respectively.
The decision made by the Monetary Policy Committee (MPC) of the CBE has aimed to curb the rise of inflation as a consequence of price increases on subsidised fuel and electricity.