Year-on-year inflation rate declines to 13.6% in August

CAIRO - 10 September 2018: The Central Agency for Public Mobilization and Statistics (CAPMAS) announced on Monday that the year-on-year inflation rate in August declined to 13.6 percent this year against 33.2 percent in August 2017.

However, the monthly inflation rate recorded a rise of 1.7 percent (294.9 points) from 13 percent in July. CAPMAS explained in its statement that the increase is due to the hike in prices of vegetables (8 percent), meat and poultry (1.4 percent), fruits (4.9 percent), dairy products and eggs (1.3 percent), and natural and butane gas (5.5 percent).

In parallel, the Central Bank of Egypt (CBE) announced that the country’s core inflation -excluding food and energy prices - rose to 8.83 percent in August from 8.54 percent in July.

Capital Economics estimates that Egypt’s headline inflation rate - consisting of only urban consumers - recorded 14.2 and 13.2 percent in August and July respectively, not surpassing the central bank’s target of 13%±3% for the end of this year.

The company indicated in the report it released Monday that food prices make up 40 percent of the consumer price index (CPI) rise by 11.6 and 9.6 percent in August and July, respectively, while the rates for non-food inflation in the same months reached 16.3 and 16.5 percent.

Capital Economics reports that prices of housing went down to 11.6 percent in August from 22 percent in July and those of transport declined to 38.1 percent from 40.5 percent. Additionally, clothing inflation decreased from 15.6 percent in July to 14.6 percent in August.

On the other hand, prices of health services and education remained at 3.9 and 19.6 percent, respectively, in both months.

The company speculates that CBE will keep the interest rates unchanged in light of the recent sell-off in EM financial markets, and that overnight deposit rate will drop to 11.25 percent from 16.75 percent by the end of the year.

CAPMAS measures monthly the prices of 1,000 consumer goods and services at 15,000 outlets in eight geographical areas. The third of that amount of goods and services is measured weekly, while the data are collected between 1 and 28 of each month.