Egypt’s annual headline inflation eases slightly to 14.2% in March
cairo — Egypt’s annual urban consumer price inflation eased to 14.2 per cent in March from 14.4 per cent in February, the state statistics agency CAPMAS said on Wednesday.
Analysts said the figures were in line with expectations.
“Inflation was expected to hover around the 14 per cent level, given expected volatility in prices of food and vegetables,” said Allen Sandeep, head of research at Naeem Brokerage.
But food supply issues appear to have eased, he said, adding that food and non-alcoholic beverages price increases were down to 1.5 per cent from 3.5 per cent monthon-month. Egypt has implemented a series of austerity measures to help meet the terms of a $12 billion IMF loan programme it signed in late 2016. As part of the IMF deal, it is set to phase out subsidies on most fuel in June, which could add to inflationary pressures.
“Annual inflation will stabilise between 14 and 15 per cent during August and the effects of lifting subsidies on fuel products are expected to be seen more in the monthly figures than the annual figures,” said Radwa El Swaify, head of research at Pharos Securities Brokerage.
Urban consumer price inflation was 14.4 per cent in February, rising from 12.7 per cent in January and 12 per cent in December. Inflation had hit a high of 33 per cent in July 2017. Core inflation, which strips out volatile items such as food, fell to 8.9 per cent in March from 9.2 per cent in February.
“Falling core inflation shows limited inflationary pressures outside the fruits and vegetables basket,” said Hany Farahat, senior economist at Egyptian investment bank CI Capital.
The central bank’s Monetary Policy Committee (MPC), after a surprise cut in February, held rates steady at its March 28 meeting, saying the decision was “consistent with achieving the inflationary target of 9 per cent” by the fourth quarter of 2020.
“It’s good to see that inflation continues its longer-term downtrend. However, rises in fuel prices will push inflation higher in the summer,” said Angus Blair, chief operating officer at Pharos Holding. “There is a window of opportunity for the Central Bank of Egypt to cut interest rates as inflation falls, and I would like to see the MPC grasp that and cut rates in its next meeting.”
Central bank policymakers, who target inflation of 13 per cent plus or minus 3 percentage points, next meet on May 23.
Falling core inflation shows limited inflationary pressures outside the fruits and vegetables basket
Hany Farahat, senior economist, Egyptian investment bank CI Capital