In­fla­tion climbs to 32.9% in April, shows slower pace

The Daily News Egypt - - Front Page - By Mo­hamed Ayyad and Shaimaa Al-Aees

In­fla­tion con­tin­ued to rise, scor­ing 32.9% at the end of April, up from 32.5% in March, due to higher prices of veg­eta­bles, meat, fish, poul­try, and fruits.

The rise of in­fla­tion, driven by price hikes, bur­den Egyp­tians, es­pe­cially in the cur­rent tough eco­nomic phase.

How­ever, monthly in­fla­tion slowed down for the third month in a row to record 1.8% in April com­pared to 2.1% in March, 2.7% in Fe­bru­ary, and 4.3% in Jan­uary.

How­ever, HSBC said in a re­port is­sued on Wed­nes­day that month-on­month price growth in Egypt fell for the third con­sec­u­tive month, edg­ing down from 1.9% in March to 1.7% in April as it is low­est level since Oc­to­ber 2016, the price pres­sures re­main substantial.

HSBC noted that monthly food price growth rose from 3% to 3.2% in April, bring­ing the an­nual growth rate up to 43.6%. In year-on-year terms, head­line in­fla­tion also con­tin­ued to hit new records, ris­ing 0.6% to 31.5% in April.

“In­ter­est rates re­main well into neg­a­tive ter­ri­tory and re­cent IMF com­ments on the ben­e­fit of us­ing an in­ter­est-rate pol­icy to con­trol in­fla­tion have boosted ex­pec­ta­tions that the Cen­tral Bank of Egypt could hike at the 21 May MPC meet­ing,” HSBC said. “How­ever, is that with monthly in­fla­tion con­tin­u­ing to de­cel­er­ate, growth still weak and credit ex­pan­sion sub­dued, rates are likely to re­main on hold.The fis­cal costs of any mone­tary pol­icy tightening also weigh against a hike.”

Prices of food and drinks jumped 44.3%.The in­crease in food prices con­trib­uted by 32% to the an­nual in­fla­tion.

The Cen­tral Agency for Pub­lic Mo­bi­liza­tion and Statis­tics (CAPMAS) stated that the in­fla­tion in­crease in April was due to higher prices of ce­re­als and bread, meat and poul­try, fish and seafood, dairy, cheese and eggs, oils and fats, veg­eta­bles and fruits.

Egyp­tian Fi­nance Minister Amr ElGarhy said that in­fla­tion is ex­pected to be­gin de­creas­ing at the end of the year.

He also said in pre­vi­ous re­marks that the In­ter­na­tional Mone­tary Fund (IMF) mis­sion is con­duct­ing open di­a­logue with the lead­ers of the Cen­tral Bank of Egypt (CBE) to dis­cuss the pos­si­bil­ity of rais­ing in­ter­est rates to con­tain in­fla­tion.

A sharp surge in ba­sic and non-ba­sic com­mod­ity prices began af­ter the flota­tion of the pound in Novem­ber.

Re­ham El-De­souki, an econ­o­mist at Arqaam Cap­i­tal, said that the num­bers are pos­i­tives and in­di­cate the pass­ing of the flota­tion shocks. She noted that this is the fourth month when monthly in­fla­tion in­crease de­clines.

The gov­ern­ment is fur­ther­more work­ing to lib­er­alise en­ergy prices in 2018/2019, ac­cord­ing to an agree­ment with the IMF. How­ever, it re­cently stressed that prices will not be fully lib­er­alised.

Ji­had Azour, the new head of the IMF’s Mid­dle East de­part­ment, told Reuters re­cently that low­er­ing the in­fla­tion rate in Egypt is nec­es­sary to keep the coun­try’s eco­nomic re­form pro­gramme on track and re­duce the bud­get deficit.

“We are work­ing with the Egyp­tian au­thor­i­ties and the CBE to re­duce in­fla­tion,” IMF di­rec­tor Chris­tine La­garde said on Mon­day. She showed dis­sat­is­fac­tion with the high in­fla­tion.

Egyp­tians spend more than 41% of in­come on food and drinks, ac­cord­ing to CAPMAS’ in­come and ex­pen­di­ture re­search.

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