Egypt inflation rises to 10.4 per cent in December: official data
Marwa Hussein, Tuesday 10 Jan 2012
Consumer price inflation continues to climb, pushed upward by rising food consumption, say experts

Egypt’s annual inflation registered 10.4 per cent in December, a significant rise on the month before, according to figures released by the Central Agency for Statistics and Mobilisation (CAPMAS).

December's rise follows climbs of 9.1 per cent in November and 7.5 per cent in October.

Monette Doss, research manager at Prime Group, says rising food prices are acting to push up overall inflation.

"Consumption of food is increasing which is not the case for most of the other products. Thus food prices -- an important component of the Consumer Price Indices -- are growing fast”, says Doss.

Food price inflation has outstripped average inflation for the last few months and continues to rise. It climbed to 13.4 per cent in December, up from 11.6 per cent in November, and 8.7 per cent in October.

Hani Genena, head of research at Pharos Holding, says other reasons for the rise in inflation could include the soaring prices of cylinder of butane gas in the black market and the increase in international price for some food products like sugar. Turbulence in local supplies of rice could also be a factor, he said.

The recent slight devaluation of the pound also had some effect, according to Genena, who adds that energy prices could be another factor.

"Butane cylinders are heavily used by chicken farms and brick factories, and that can have an effect on the prices of other products. Their official price is around LE5 but their prices in the black market have reached LE30 in some areas," says Genena.

He believes the upward trend will continue in the coming months following the government's decision to remove subsidies on energy supplied to heavy industries.

"The government seems very concerned because the increase of price for industries might trickle down to consumer prices," explains Genena.

These concerns have led to some ministers mentioning reference prices, a method to stop prices spinning out on control -- a procedure Genena says he agrees with to control inflation in the short-term.

"The proper thing to do is to enhance competition but in the current conditions it will be difficult -- administrative decisions might help for the moment," believes Genena.

Urban consumer price inflation, the most closely watched indicator, was 9.6 per cent in the 12 months to December, compared to 9.1 per cent in November.

Unusually, rural consumer price inflation was higher than urban inflation and reached 11.3 per cent in December.

"This could be because the rise in cylinder of butane gas was mainly in the governorates," says Genena.

Monthly inflation, however, fell 0.4 per cent in December.