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Egypt’s urban inflation jumps to 14.4% in Feb

An employee counts banknotes at currency exchange shop in Cairo, Egypt on 3 November 2016 [KHALED DESOUKI/AFP/Getty Images]
An employee counts banknotes at currency exchange shop in Cairo, Egypt on 3 November 2016 [KHALED DESOUKI/AFP/Getty Images]

Egypt’s annual urban consumer price inflation increased to 14.4 percent in February from 12.7 percent in January, the official statistics agency CAPMAS said on Sunday, confounding some analysts’ expectations of an imminent easing cycle.

Inflation had cooled to 12 percent in December after an increase in fuel, electricity and transportation prices last year had sent the rate up to a high of 17.7 percent in October.

Prices in the transport sector rose 32 percent, CAPMAS said, while food and beverage prices increased 15.3 percent year-on-year.

The accommodation, water, electricity, gas and fuel sector saw price rises of 15.2 percent, the agency said. The education sector’s prices rose by 15.1 percent.

Egypt has implemented a series of tough austerity measures to help meet the terms of a $12 billion IMF loan programme it signed in late 2016.

“It’s higher than what we had expected,” said Allen Sandeep, head of research at Naeem Brokerage in Cairo.

The central bank, which is targeting inflation of 13 percent plus or minus 3 percentage points, made a surprise cut to its overnight interest rates last month. It cited a strong drop in inflation and an improvement in other macroeconomic indicators.

“In our view, this should put the brakes on monetary easing for now,” Sandeep said.

The bank’s monetary policy committee will meet on March 28 to decide on interest rates.

Radwa El-Swaify, head of research at Pharos Securities Brokerage, agreed that the figure was higher than expected.

“It seems that the prices of vegetables and fruit will remain the challenge to lower inflation figures,” she said. “We expect inflation to reach 13.5-14.5 percent between now and September.”

Annual core inflation, which strips out volatile items like food, increased to 9.2 percent in February from 8.6 percent in January, Egypt’s central bank said.

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