The Egyptian economy is leaving the crisis of high inflation
Economy News - Baghdad
Recent data showed that annual consumer price inflation in Egypt continued its downward trend, breaking analysts' expectations.
Inflation fell to 7.5 percent in August from 8.7 percent a month earlier, the CAPMAS said. This marks the lowest level since March 2013, when it stood at 7.6 percent.
Compared to the previous month, the pace of consumer prices rose 0.7 percent in August from 1.1 percent in July.
Cairo is close to completing an IMF-backed economic reform program, which in 2017 saw inflation rise to a high of 33 percent.
"The core inflation rate, which does not include volatile commodities such as foodstuffs, also fell to 4.9 percent in August from 5.9 percent in July," the central bank said yesterday.
According to Revinitiv data, the August rate is the lowest in more than six years.
"The August rate falls significantly below the 9 percent target set by the central bank for the end of 2020," Reuters quoted the head of equity research at Arqaam Capital as saying.
"This paves the way for another major rate cut on September 26," he said.
The prices of vegetables and fruits in Egypt have been increasing steadily in recent years, prompting the Ministry of Interior and the army to offer some food commodities to citizens at prices below the market price in an attempt to alleviate the suffering of their shoulders.
The central bank cut interest rates by 150 basis points at its last meeting on August 22, encouraged by lower inflation.
"The figures came in much lower than expected," Radwa El-Sewify, head of research at investment bank Pharos, told Reuters.
Egypt raised domestic fuel prices last July, under the terms of the IMF agreement, and the increase was expected to push up transport, food and other commodity prices.
"The new inflation figure is partly due to the positive impact of the base year a year ago," said Nadine Johnson, an economist at NKC African Economics.
Egypt's inflation rate in August 2018 was 14.2 percent following a cut in subsidies.
Johnson said the rise in the currency, along with falling oil prices worldwide, "will support further downward pressure on prices."
However, as energy reforms are complete and global oil prices tend to decline, the analyst predicts that inflation will gradually decline next year, albeit slightly higher by the end of this year.