A shopping trolley is pushed around a supermarket - Reuters
CAIRO – 9 August 2018: Egypt’s annual consumer price inflation slipped to 13 percent in July 2018, compared to 34.2 percent in the same month of 2017 that rose due to the flotation of the Egyptian currency, state-statistics body said Thursday.
On a monthly basis, inflation increased 2.5 percent in July,compared to the previous month, to record 289.9 points, the Central Agency for Public Mobilization and Statistics (CAPMAS) said.
CAPMAS attributed the increase in inflation on a monthly basis to the rise of some commodities' prices as vegetables by 8.8 percent, fruit by 3.5 percent, and alcoholic beverages and cigarettes by 7.2 percent.Additionally, the prices of housing, water, electricity, gas and other fuels hiked by 5.2 percent, while the prices of restaurants and hotels were raised by 4.8 percent.
In June, Egypt’s annual consumer price inflation fell to 13.8 percent in June 2018, compared to 30.9 percent in the same month of 2017.
Inflation surged in Egypt since the floatation of the Egyptian pound in November 2016, reaching a high record level in July due to energy subsidy cuts and gradually easingsince July.
Research and Economic Association expected the inflation to slightly rise during July 2018 as a result of lowering the fuel subsidy and increasing electricity prices.
CAIRO - 11 July 2018: Egypt's statistic body announced Tuesday the inflation rate in June which represented a decline on a yearly basis and an increase on the monthly basis, matching the expectations of research and economic associations.
Pharos Holding attributed the monthly rise to the fuel subsidy cut that happened in mid-June, expecting the enacted fuel price increases to fully impact prices in July, in addition to the hike in electricity price that will reflect on July bills.
The Cabinet announced on June 16 lowering the fuel subsidy to 25 percent, after cutting electricity subsidies on June 12, raising prices by an average of 26 percent in the 2018-2019 fiscal year that began in July.
Pharos further anticipated the annual inflation rate to accelerate from 12.7 percent in the fourth quarter of fiscal year 2017/2018 to 14.6 percent YoY in the first quarter of 2018/19, expecting it to decelerate again to 13.9 percent YoY in the second quarter of 2018/19.
Beltone Financial also agreed with Pharos that cutting subsidies pushed inflation rates up, expecting this quarter to witness a continued rise in inflation on a monthly basis due to seasonal Islamic and summer holidays, as well as a slower pace with relatively slower consumption as a result of pressures on income.
“We also expect an average monthly rise of 2 between June and September 2018,” Beltone stated.
It also believed that inflation in June will be the highest rate during the second half of 2018, which remains within the target range of the central bank at 13 percent (+/- 3 percent) by the end of 2018.
Agreeing with other associations, Capital Economics attributed the rise in inflation to subsidy cuts.
“Inflation may rise a little further in July in light of electricity price hikes that came into effect in the beginning of this month,” Capital Economics said in a report. "Even so, we doubt that higher inflation rates will prompt the Central Bank of Egypt (CBE) to raise interest rates inits mid-August meeting."
The report expected the inflation rate to return to its downtrend in August, allowing CBE to continue its easing cycle.
Fitch Rating also expected that inflation in Egypt will fall but will remain in double digits, averaging around 13 percent, assuming that subsidy reform in July will lead to energy price increases given the increase in oil prices.
“Egypt’s inflation is expected to temporarily rise in 2018/19, reflecting increases in fuel and electricity prices. However, inflation rate will move to single digits by next year,” the International Monetary Fund's (IMF) Mission Chief for Egypt Subir Lall said on Twitter.
Comments
Leave a Comment