Egypt annual inflation rate falls below 30% for 1st time in 15 months

Doaa A.Moneim , Monday 10 Jun 2024

Egypt's annual headline inflation rate has maintained its downturn trend for the third consecutive month, dropping to 27.4 percent in May from 31.8 percent in April, the Central Agency for Public Mobilization and Statistics (CAPMAS) announced on Monday.

fruit seller
File Photo: People walk past a fruit seller s stall in the Azhar district of Egypt s capital Cairo. AFP


This significant decrease represents a 6.3 percent reduction compared to May 2023 when the inflation rate stood at a staggering 33.7 percent.

May’s inflation rate is the first below 30 percent level since February 2023 when the inflation rate recorded 32.9 percent.

CAPMAS attributed the decline to the decrease in the prices of bread and cereals by 2.5 percent, poultry and meat by 4.6 percent, oils and fats by 3 percent, and other foodstuff by 1.7 percent.

Moreover, food and beverage prices dropped by 3.1 percent in May compared to April.

However, CAPMAS’ figures show that other commodity groups witnessed a spike in April, including fruits by 12.4 percent; coffee, tea, and cocoa by 0.8 percent; tobacco by 8.6 percent; fabrics by 1.7 percent; and ready-made clothing by 1.7 percent.

Despite this decline, the rates are still beyond the target set by the Central Bank of Egypt (CBE): 7 percent (±2 percent) in the fourth quarter of 2024 and 5 percent (±2 percent) in the fourth quarter of 2026.

Inflation rates are the key factor that drives the decision of the CBE's Monetary Policy Committee (MPC) on key interest rates in the eight meetings the committee holds over the year.

In its last meeting held in May, the CBE kept the key interest rates unchanged following the total hikes of eight percent (800 bps) it has applied since the start of 2024.

Taming the country’s inflation is a key priority under its $8 billion loan deal programme with the International Monetary Fund (IMF).

In the IMF’s statement on the programme's third review, the fund said that tightening Egypt’s monetary policy will remain over the short term, which indicates that inflation could remain high over the near term.

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