Egypt's 10.8 per cent inflation a 'warning sign'

Salma El-Wardani , Thursday 10 Mar 2011

While the month on month figures are stable, analysts predict a dark toll looming

Rising food prices mean the poor are not able to buy enough to eat. Photo: AP

Egypt's annual inflation has reached 10.8 per cent, with the Consumer Price Index (CPI) hitting 111.1 in February, recording a slight increase of 0.1 per cent compared to the month before, according to the CAPMAS.

"Despite the significant political changes Egypt has witnesses through February, followed by waves of protests by employees in the public as well as the private sector, prices of goods and services have seen a general relative stability compared to last January," the statement issued by the official statistics agency reads.

Compared to January, prices of food and beverages increased by only 0.2 per cent in February, while the year-on-year change for these items recorded a significant rise of 17.8 per cent.

“I can't find tranquility in the whole report, despite the fact that the figures are so moderate,” Monette Doss, senior analyst at Prime Securities, told Ahram Online. “Food prices are just decreasing on a monthly basis due to the government's temporary measures.”

In February, the report continues, prices of meat and poultry declined by 0.5 per cent, while fish, dairy products, cheese, eggs, oils and fats, fruits, mineral water, coke as well as natural juices increased by 3.4 per cent.

Clothing and utility services like electricity, gas, telephone and fax, meanwhile, saw a dip by 2.9 per cent, compared to January.  

According to Doss, the new figures represent a “warning sign.”

“In the near future,” Doss expects, “we'll see a tremendous increase in food prices due to the excessive demand on essential commodities, compared to consumers' reluctance to spend on services and other items.

“With production in most fields ceased due to the ongoing protests and unrest, there'll be both a tremendous inflation in food prices, and a deflation on other items in the price index, and both are bad,” she adds.

Doss’s grim forecast extends to expecting Egypt’s inflation to reach 12 per cent by the end of the year.

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