Egypt’s consumer inflation climbs to 9.8% in June

Country’s currency strengthens at central bank sale

CAIRO, July 10, (Agencies): Egypt’s urban consumer inflation quickened to an annual 9.8 percent in June from 8.2 percent in May, the central bank and state statistics agency said on Wednesday, pushed higher by rising food prices ahead of Ramadan.

An economist said prices rose as people stocked up on food ahead of the month of Ramadan, when the daytime fast is traditionally broken by hearty meals.

“Food prices drove the acceleration, as expected, as we approach Ramadan and on a weaker Egyptian pound. Non-food inflation was stable,” said Mohamed Abu Basha of EFG Hermes.

Egypt’s annual core inflation rate, which strips out subsidised goods and volatile items including fruits and vegetables, rose to 8.56 percent in the year to June from 8.04 percent in the year to May, the central bank said.

Since December the pound has lost 12 percent of its value against the dollar on the official market and even more on the black market, pushing up the cost of imports.

The pound weakened after the 2011 popular uprising, which scared away tourists and investors, two of the country’s main sources of foreign exchange. Analysts say the currency remains overvalued against the dollar.

The Egyptian pound strengthened at a central bank sale of foreign exchange on Wednesday, for the third time since the military removed Islamist President Mohamed Mursi from power one week ago.

The central bank sold $38.8 million to banks, with the cut-off price at HONG KONG, July 10, (RTRS): Egypt’s new rulers have a fighting chance of implementing their ambitious and controversial plan to build a fully-functioning democracy within one year, thanks to significant financial support from the Gulf. Following the army’s removal of the Muslim Brotherhood from power and the appointment of respected economist Hazem el-Beblawi as interim prime minister, Saudi Arabia and the United Arab Emirates have pledged $8 billion in aid to Cairo in the form of cash, central-bank deposits, and petroleum products.

The coordinated effort reveals Saudi 6.9992 pounds to the dollar compared to 7.0097 pounds at Monday’s sale, the banker said.

On the black market, the pound was steady, with one dealer offering to sell dollars for 7.25 pounds and buy for 7.20 pounds.

The central bank introduced the currency sales, held three times a week, at the end of December to help stave off a currency crisis and thwart a run on the pound.

Since then, the bank has allowed the currency to lose 12 percent of its value on the official market.