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Inflation in urban Egypt highest in three years

Egypt's urban consumer inflation soared to its highest rate in over three years in March as food prices jumped, adding to the pressure on the central bank to raise interest rates for a third time this year.

  • Reuters
  • Published: 01:00 April 11, 2008
  • Gulf News

Cairo: Egypt's urban consumer inflation soared to its highest rate in over three years in March as food prices jumped, adding to the pressure on the central bank to raise interest rates for a third time this year.

The urban consumer price index rose 14.4 per cent in the year to March after a 12.1 per cent increase in February, Egypt's government statistics agency CAPMAS said yesterday..

March's rate, the highest since urban inflation hit 17.3 per cent in December 2004, is a blow to the government's attempts to hold prices down and reduce social tensions which have arisen from increasing food prices.

Egypt has seen lengthening queues for state-subsidised bread and a wave of wage strikes over the past year in response to more difficult economic times. A strike in the Nile Delta town of Mahalla this week led to riots in which two people were killed and more than 100 injured.

"International prices were still high and the measures that the government had taken to calm domestic food prices had not had an effect yet," said Reham Al Desoki, senior economist at investment bank Beltone Financial, explaining the rise.

But she said that the pace of price rises could slow in coming months, as the effects of government measures to reduce rising food costs kick in.

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