CAIRO: Annual inflation in Egypt eased to its lowest level since May 2016, offering further evidence that the impact of the pound’s floatation and subsidy cuts is fading.
The annual rate in March in urban parts of Egypt dropped to 13.3 per cent from 14.4 per cent in February, according to data posted on the website of the state-run statistics agency CAPMAS. The figure is squarely within the target range of 13 per cent, plus or minus 3 percentage points, that the central bank had set after the November 2016 decision to lift currency controls to end a crippling dollar shortage.
The slowing price rises support the central bank’s decision to cut interest rates by 100 basis points at its last meeting in March. That reduction — the second in a row — signalled the bank was satisfied with the easing of inflation, which had hovered around 30 per cent for the better part of last year.
Prices rose 1 per cent month-on-month. The pace of the increase accelerated for the third consecutive month, driven mostly by seasonal factors such as Easter and the approaching Ramadan, said Cairo-based economist Reham El Desoki.
“The 11 per cent to 12 per cent level is expected to continue until the fourth quarter, when we might see a dip to 10 per cent for one or two months before the rate rises again” to the same range, she said.
As part of the sweeping economic measures adopted to help secure a $12 billion International Monetary Fund loan, the government is expected to cut energy subsidies further and implement other cost-cutting measures.
The subsidy cuts are unlikely to affect inflation much, particularly as consumer demand is still recovering, El Desoki said.
— Bloomberg
