File Photo: vegetables and Fruits in a market. (Reuters)
Egypt’s annual headline inflation hit its highest level in at least seven years to register 20.2 percent in November 2016 compared to 11.8 percent for the same month last year, state statistics body CAPMAS said in an e-mailed statement on Thursday.
The monthly Consumer Price Index (CPI) rose by five percent, compared to a 1.8 percent rise for October.
CAPMAS attributed the spikes to the Central Bank of Egypt's (CBE) decision in early November to float the pound against the dollar and raise key interest rates, as well as to the government’s decision to reduce fuel subsidies.
According to CAPMAS, food and beverage prices registered a five-percent increase in November, while the cost of medical care and transportation rose by 5.5 and 12.6 percent respectively, compared to October.
Egypt embarked on a fiscal reform programme in July 2014 in an attempt to curb the growing state budget deficit—now 12.2 percent of the GDP—by cutting subsidies and introducing new taxes including the value added tax.
In November this year, the petroleum ministry announced new raises for subsidised fuels, including octane, diesel, butane and natural gas, and low-quality mazut.
The CBE decided in early November to raise interest rates, surprising markets with a 3 percent rise in key rates. The bank kept rates unchanged throughout the rest of the month.
The bank's Monetary Policy Committee kept the overnight deposit rate at 14.75 percent and the overnight lending rate at 15.75 percent.