Egypt’s inflation eases in July

cairo — Egypt’s annual inflation rate dropped in July after a surge a month earlier when cuts to energy subsidies imposed under an IMF loan deal hit the economy.

Egypt’s urban consumer price inflation slowed to an annual 13.5 per cent in July from 14.4 per cent in June, the official statistics agency Capmas said.

Core inflation meanwhile fell to the lowest rate since March 2016 — 8.54 per cent in July, from 10.9 per cent in June, central bank data showed. The figure strips out volatile items such as vegetables, fruit and items with regulated prices such as fuel.

Prices had soared after the import-dependent country floated its currency in November 2016, reaching a record 33 per cent in July 2017. Inflation rates have since gradually eased, reaching their lowest levels in almost two years in March.

But in June, annual urban consumer inflation quickened to 14.4 per cent, as cuts to energy subsidies imposed under an International Monetary Fund loan agreement hit the economy more than expected.

“We expected the hike to be fully apparent in June and the reduced spending levels would let the impact fade away in July,” said Alia Mamdouh, lead economist at Beltone Financial.

Egypt has raised fuel, electricity and transportation prices over the past months to help meet the terms of the $12 billion IMF loan programme it agreed to in late2016. The programme calls for tax increases and deep cuts to energy subsidies.

The central bank will next meet on August 16 to set interest rates. Despite the fall in inflation, analysts expect the bank to keep deposit and lending rates unchanged. —