FILE PHOTO: Egyptian labourers work at a construction site of a new road as the pyramid of Khufu or "Cheops" is seen in the back, in Giza, Egypt, November 9, 2020. REUTERS/Amr Abdallah Dalsh
October 10, 2021
DUBAI/CAIRO (Reuters) -Egypt’s annual urban consumer price inflation (CPI) climbed to its highest in 20 months in September, rising to 6.6% year on year from 5.7% in August, data from the country’s statistics agency CAPMAS showed on Sunday.
The rate remains well within the target range of between 5% and 9% set by the central bank, which next meets on Oct. 28 to decide interest rates.
“Monthly inflation is higher than we had anticipated. It’s mainly explained by the jump in vegetable and meat prices. The food index is up 3.5% month on month,” said Allen Sandeep of Naeem Brokerage.
Headline inflation was last this high in January 2020, when it reached 7.17%.
Egypt’s fuel pricing committee also raised domestic prices in a quarterly review on Friday, indicating that more price rises may lie ahead.
“We expect inflation in October to maintain its monthly momentum, with the seasonal spending accompanying the school season coupled with the inflationary impact of the introduced increase in fuel prices,” Beltone analyst Alia Mamdouh said in a note.
Naeem Research by contrast predicted inflation could lessen in October.
“We expect annual inflation to cool down, given favourable base year impacts (contributing -1.9%) and a slower increase in monthly inflation,” it said in a note.
“Our calculations indicate that the latest gasoline price hike (of EGP0.25/litre) would have less than a 30 bps (basis point) impact on monthly CPI.”
The central bank held rates steady at its last meeting on Sept. 16, saying that global financial conditions continued to be “accommodative”.
Core inflation, which strips out volatile items such as food, rose to 4.8% year on year in September, from 4.5% a month prior.
(Reporting by Nadine Awadalla and Patrick WerrEditing by Raissa Kasolowsky, David Goodman and Barbara Lewis)