The figures are the highest in almost five years and well beyond the inflation target the Central Bank of Egypt (CBE) set at seven percent (±2 percent) for one year.
CAPMAS attributed the increase on a monthly basis to the rise in the prices of bread and grains by 9.2 percent, poultry and meat by 29.7 percent, seafood by 19.5 percent, and dairy products by 11.1 percent.
The agency ascribed the rise in annual inflation mainly to the significant increase in the prices of food and beverages by 61.5 percent, entertainment and cultural services by 40.9 percent, restaurants and hotels by 50.3 percent, and healthcare by 16.8 percent.
The CBE’s Monetary Policy Committee (MPC) is scheduled to convene on 30 March to review the key interest rates in light of the recent updates.
The CBE is projected to expand in its monetary tightening policy through introducing more hikes in key interest rates.
In its first meeting in 2023, held in February, the CBE maintained the current interest rates at 6.25 percent, 17.25 percent, 16.75 and 16.75 percent, for the overnight deposit rate, overnight lending rate, the rate of the main operation, and the discount rate, respectively.
The CBE hiked key interest rates, as front-loaded action, by a total of eight percent (800 bps) over 2022 to contain the rising inflation and keep the prices stable in the market.
Five percent (500 bps) of these were applied in the fourth quarter of 2022 alone for the sake of countering the inflationary pressures, in addition to raising the required reserve ratio by four percent (400 bps) in September 2022.
Under its four-year Extended Fund Facility Programme with the International Monetary Fund (IMF), Egypt is committed to taming inflation down to seven percent by FY2024/2025 while expanding in the adoption of flexible interest and foreign exchange rate regimes.
The IMF is scheduled to conduct its first review of the programme on 15 March, which paves the way for Egypt to receive the second tranche of the $3 loan the programme avails for the country. The second tranche is worth $347 million.