Ramadan, wheat harvest season to push inflation up in next 2 months: Pharos Holding

CAIRO – 12 April, 2017: Increased consumption during the Islamic holy month of Ramadan and the wheat harvest season are expected to trigger further pressures on inflation over the next two months, Pharos Holding, a local investment bank, stated Wednesday.

The monthly inflation rate dropped to 2.1 percent month-on-month (MoM) in March, down from 2.7 percent in February, while the annual rate grew at the slowest pace since the EGP flotation in November, despite the low base effect of the corresponding period in 2016, the report added.

The core inflation rate fell to 32.2 percent in March 2017, compared with 33.1 percent in February, the Central Bank of Egypt (CBE) announced Monday.

“We reiterate that the monthly inflation rate will be affected by two seasonal drivers in the next two months; the Holy month of Ramadan, which traditionally witnesses an inflation rate acceleration, and the wheat harvest season, which tends to diffuse sharp food price movements,” Pharos said.

Inflation has accelerated in Egypt since November on the back of the pound's 50 percent plunge against the dollar after the flotation, coupled with introducing a value-added tax and subsidy cuts. These reforms were necessary for Cairo to sign a $12 billion deal with the International Monetary Fund to support Egypt's economic reform program over three years.