CAIRO: Egypt’s headline inflation surged to an eight-year high of 19.4 per cent in November, in the first report on price rises since the central bank floated the currency and hiked fuel prices last month.
Annual urban consumer price inflation jumped from 13.6 per cent in October, the official CAPMAS statistics agency said in a statement, to reach its highest level since Nov. 2008, when it exceeded 20 per cent.
CAPMAS said food and beverage inflation reached 21.5 per cent in November, an eye-watering number for tens of millions of Egyptians who scrape by day to day.
Egypt abandoned its peg of 8.8 Egyptian pounds to the US
dollar on Nov. 3, floating the currency in a dramatic move that has since seen it roughly halve in value.
The move helped Egypt secure a $12 billion three-year loan from the International Monetary Fund to support an economic reform programme that has seen the government introduce Value Added Tax, cut electricity subsidies and sharply raise import duties all the space of a few months.
The measures have had the effect of reducing imports and dramatically increasing prices in the country of more than 90 million.
Economists have forecast inflation of up to 20 per cent by year-end on the back of the currency depreciation. They expect prices to keep rising into next year.
“The inflation rate will continue to rise in December and the first quarter of 2017. Don’t forget that the government hiked customs tariffs this month,” said Reham El Desoki, senior economist at regional investment bank Arqaam Capital.
Egyptian officials have sought to reassure the poor that they would be shielded from the worst effects of soaring prices as public anger simmers.
The government has expanded its social security network and some 70 million Egyptians have access to state subsidised bread and other basics.
(Reporting by Lin Noueihed and Ehab Farouk; Editing by Kim Coghill and Raissa Kasolowsky)
