Cairo: Egypt's inflation rate accelerated in January, though not by enough to undermine the central bank's decision to keep interest rates on hold.

Urban inflation, the benchmark rate that the central bank monitors, accelerated to 13.6 per cent from 13.2 per cent in Dec-ember, the Cairo-based Central Agency for Public Mobilisation and Statistics said on its website on Wednesday. The median estimate of five economists surveyed by Bloomberg was for inflation to be at 13.4 per cent.

The central bank, which meets to decide on interest rates every six weeks, has kept its benchmark overnight deposit rate at a three-year low of 8.25 per cent for the past three meetings, citing "subdued" inflationary pressures.

"It reflects a slight increase, but not an alarming increase," John Sfakianakis, chief Middle East and North Africa economist for Credit Agricole CIB in Riyadh, said about yesterday's report.

The central bank cut rates six times in 2009 to help the economy through the global financial crisis, which reduced foreign direct investment and hurt revenue from tourism and fees from the Suez Canal, a global shipping route. The bank's next rates meeting is on March 18.

Core inflation, which excludes fruit, vegetables and regulated prices, accelerated to 6.85 per cent in Dec-ember from 6.59 per cent the month before. It probably rose to 7.1 per cent in January, according to Simon Williams, chief Middle East economist at HSBC Holdings Plc in Dubai. The central bank hasn't yet released January data for core inflation.

No Closer

"The market will look at the core reading much more closely than the headline figure," Williams said yesterday by e-mail. "I still expect the next move in rates to be upward, but I don't think today's print brings the hike any closer."

The cost of food and drinks, which make up more than 45 per cent of the consumer price index, rose 1 per cent in the month, the statistics agency said. The costs of housing, water, electricity and fuel increased 3.2 per cent.

The data "is slightly above our expectations, but doesn't change our outlook," said Mohammad Abu Basha, an economist at EFG-Hermes Holding SAE, Egypt's biggest publicly-traded investment bank. "Inflationary pressures are weak and economic growth is fragile."