Egypt annual headline inflation keeps downward path in June: CAPMAS

Doaa A.Moneim , Wednesday 10 Jul 2024

Egypt’s headline annual inflation rate kept its downturn path in June, for the fourth consecutive month, decelerating to 27.1 percent compared to 27.4 percent seen in May, the Central Agency for Public Mobilization and Statistics (CAPMAS) announced on Wednesday.

File Photo: CAPMAS. Photo: Al-Ahram


Meanwhile, the monthly headline inflation rate shifted from -0.8 percent in May to 1.8 percent in June.

CAPMAS attributed the slowdown of the headline annual inflation mainly to the decline in prices of poultry and meat (by 3.7 percent), vegetables (by 2.3 percent), post services (by 4.3 percent), and cereal and bread (by 13.5 percent).

Moreover, CAPMAS said the shift in the monthly inflation rate resulted from the increase in prices of vegetables and fruits (by three percent), clothes and shoes (by 1.2 percent), healthcare services (by 2.7 percent), and electricity; fuel; water (by 0.5 percent).

CAPMAS’ figures show a significant spike in prices of commodities and services in June 2024 compared to the same month of 2023.

Accordingly, prices of food and vegetables jumped in June by 30.8 percent, transportation by 17.5 percent, electricity; fuel; water by 12.4 percent, clothes and shoes by 25.9 percent, and culture and entertainment services by 56.6 percent.

The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) is scheduled to convene on Thursday 18 July to review the key interest rates in the committee's first meeting in the current FY2024/2025, which started on 1 July, and the fourth in 2024.

The MPC decides on the key interest rates in light of the global and local macroeconomic development, especially the inflation rates, along with the performance of the local currency against the US dollar.

Since January, the CBE has increased the key interest rates by eight percent (800 bps).

In its last meeting held in May, the CBE maintained the overnight deposit rate, the overnight lending rate, and the main operation rate at 27.25 percent, 28.25 percent, and 27.75 percent, respectively.

The CBE attributed its decision to the inflation reduction in the past few months.

With the new inflation figures announced, Egypt’s headline inflation is still far beyond the targets the CBE has set at seven percent (±2 percent) in the fourth quarter of 2024 and five percent (±2 percent) in the fourth quarter of 2026.

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).

On Tuesday, the IMF decided to reschedule its Executive Board’s meeting on Egypt’s third review under the loan programme to be held on 29 July instead of 10 July without giving more details.

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