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Egypt's annual urban inflation passes 10pct in September: CAPMAS

Surging demand driven by interest rate cuts and shortened curfew hours, according to Beltone Financial, helped push up inflation in September

Ahram Online, Thursday 10 Oct 2013
An Egyptian vendor waits for costumers at a popular market in Cairo, Egypt, Thursday, Sept. 12, 2013. (Photo: AP)

Egypt’s annual urban inflation rose to 10.1 percent in the 12 months to September 2013, up from 9.7 percent recorded in year-to-August, figures from the Central Agency for Statistics and Mobilisation (CAPMAS) showed Thursday.

The overall annual inflation rate registered 11.1 percent in September, reaching 141.6 points.

On a monthly basis, inflation also increased to 1.6 percent in September compared to 0.7 percent in the month before.

The CAPMAS report attributes the annual and monthly rise to food price hikes, including vegetables, which saw a 3.6 percent increase in cost, and poultry and meat, whose prices surged 3.4 percent.

Egypt's minister of supply has threatened grocers with government price ceilings if they do not diminish whopping profit margins.

Egypt’s transportation costs, which swelled in September (up 9.6 percent) also drove up inflation — particularly as rail operations have been halted since 14 August when two sit-ins of supporters of ousted president Mohamed Morsi were forcibly dispersed.

According to its official website, Egyptian railways handle around 500 million passengers annually (1.4 million per day).

This is the first long-term closure of the railway system since the 18-day uprising that ousted Hosni Mubarak in 2011.

Cairo-based investment bank Beltone Financial has attributed the upturn of the Consumer Price Index to the surge in domestic demand.

As curfew hours have been shortened, coinciding with the start of the school season, and the interest rate cut for the second consecutive month, demand has increased in turn, according to Beltone.

“Increased domestic demand, which most likely was not met with increased supply, has likely pushed inflation up during September,” Beltone said Thursday.

In September, the monetary policy committee of the Central Bank of Egypt slashed the deposit rate and the lending rate by 50 basis points to reach 8.75 percent and 9.75 percent respectively.

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