Egypt Daily News – The latest data from CAMPAS in Egypt indicates that the annual inflation rate for consumer prices in Egyptian cities rose to 26.4% in September, slightly up from 26.2% in August.
This marks an increase in monthly prices by 2.1%. Notably, food prices saw a significant increase, rising by 2.6% in September after a 1.8% increase in August, and are up 27.7% year-over-year.
The increase in inflation can be attributed to various factors, including a rise in fuel prices (between 10% and 15%) that occurred at the end of July, a considerable hike in metro ticket prices (25% to 33%) at the beginning of August, and increases in electricity prices (21% to 31%) in both August and September.
Despite a gradual decrease in inflation from a high of 38.0% recorded in September 2023, the real overnight key interest rates have turned positive for the first time since January 2022, reaching 27.25%.
The Central Bank of Egypt has implemented a tightening monetary policy as part of an eight billion dollar financial support program with the International Monetary Fund, which includes measures to raise local prices and devalue the pound.
Analysts had anticipated that inflation would decline in September after an unexpected increase in August resulting from government-approved price hikes. However, the average forecast among 19 analysts suggested a decrease to 25.9%, which contrasts with the actual rise to 26.4%.
The financial support package from the International Monetary Fund, established to address inflationary pressures, also involved raising prices of various local products to reduce a substantial budget deficit amounting to 505 billion Egyptian pounds (about 10.3 billion dollars) for the fiscal year ending June 30. Additionally, the value of the Egyptian pound has been notably diminished.
James Swanston from Capital Economics commented that the easing of inflation was likely due to the waning effects of a previous sharp decline in the pound. Meanwhile, Mohamed Abdel Hakim, head of research at Fleet Securities, noted that food and vegetable prices had risen more than expected but acknowledged that the difference between actual and expected inflation rates was not substantial.
