Egypt: Egyptian inflation eases in September after over seven-year high in August
October 10, 2016
In September, consumer prices rose 1.2% over the previous month, which was below August’s 1.9% increase. According to the Central Bank, the milder rise mainly reflected a slight decrease in prices of fruits and vegetables, while prices for regulated items continued to expand on the back of higher electricity prices.
Inflation came in at 14.1% in September. The figure was notably below August’s 15.5% reading, which had marked the highest inflation level since December 2008. Although September’s reading provided a respite from surging prices, a likely devaluation of the pound will cause inflation to increase before year-end. The upcoming devaluation is perceived as essential not only to end the foreign-currency shortage in Egypt, which has seen foreign investors fleeing the country, but also to comply with measures required by the IMF to obtain USD 12.0 billion in funding.
Meanwhile, annual average inflation rose from 11.3% in August to 11.7% in September, the highest level since November 2009. Core inflation, which excludes volatile items such as fresh fruit and vegetables, was a record-high 13.9% in September, notably above August’s 13.3% reading.
Author: David Ampudia, Economist