Cost of liv­ing soars

Business monthly (Egypt) - - IN BRIEF -

For the sec­ond month in a row, an­nual head­line in­fla­tion hit an eight-year high in De­cem­ber, reach­ing 23.27 per­cent af­ter record­ing 19.43 per­cent in Novem­ber. Core in­fla­tion rose even more, hit­ting 25.86 in De­cem­ber, up from 20.73 per­cent the pre­vi­ous month. “The monthly in­crease was mainly driven by higher prices of core food items due to cost push ef­fects in ad­di­tion to con­tin­ued sup­ply shocks re­lated to rice and sugar,” wrote the Cen­tral Bank in its monthly in­fla­tion note. Prices have bal­looned since early Novem­ber, when Egypt al­lowed the pound to float freely against the dol­lar, send­ing the of­fi­cial ex­change rate from LE 8.83 per dol­lar to around LE19 per dol­lar as of late Jan­uary. In an at­tempt to con­trol in­fla­tion, the CBE raised in­ter­est rates by 300 ba­sis points at the time of the float, but it has since held rates steady. In a Dec. 29 press re­lease ex­plain­ing its de­ci­sion not to boost in­ter­est rates fur­ther, the bank pre­dicted that an­nual in­fla­tion would nar­row “af­ter be­ing im­pacted by tran­si­tory cost-push fac­tors stem­ming from the eco­nomic re­form mea­sures.”

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