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Egypt's inflation easing as food prices fall
Egypt has gone through the worst of inflation and lower global food prices will bring down the inflation rate in the most populous Arab country, Finance Minister Yousuf Boutros-Ghali said on Sunday.
- Bloomberg
- Published: 23:53 September 22, 2008
Cairo: Egypt has gone through the worst of inflation and lower global food prices will bring down the inflation rate in the most populous Arab country, Finance Minister Yousuf Boutros-Ghali said on Sunday.
Boutros-Ghali told reporters that inflation, at a 16-year high, would not stop the government from pursuing economic reforms. He said a new package of state-run enterprises would be offered for privatisation in the next few months.
"The worst is behind us in terms of inflation. We are just winding down what was in the system," he said. "Look at international commodity prices. Wheat used to be $480 (a tonne) and it is now at $250. Corn is the same. Soybean is the same. Edible oils the same. All of this is bound to translate here," he said.
Urban inflation rose above market expectations to 23.6 per cent in the year to August.
Economists say they expect inflation to drag real gross domestic product (GDP) growth to below seven per cent in the current 2008-09 fiscal year, from 7.2 per cent in the previous year.
Boutros-Ghali said that 80 per cent of inflation stemmed from higher prices for imported goods or for goods whose prices are government-controlled, and that the impact of inflation on domestic consumption was "fuzzy".
"Some sectors are beginning to feel a certain retrenchment, while some sectors have not felt it yet."
The minister said the government was likely to beat its budget deficit target of 6.9 per cent of GDP this year but refused to give a GDP forecast, saying there were too many unpredictable variables.
Saudi Arabia inflation slows to 10.9%
Inflation in Saudi Arabia slowed to 10.9 per cent in August as the cost of rent, water and fuel continued to hover near record levels, the Saudi Press Agency reported, citing the Central Department for Statistics.
Inflation in Saudi Arabia has soared since mid-2007 when it was about three per cent, and has surpassed 10 per cent in each of the last three months, though it has eased since reaching a record of 11.1 per cent in July.
Inflationary pressures will remain strong as government and private spending increases the Saudi Arabian Monetary Agency said.
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