Egypt Inflation December 2016

Egypt

Egypt: Inflation surges to over eight-year high in December

January 10, 2017

In December, consumer prices in Egypt rose a noteworthy 3.1% from the previous month. The increase was, however, below the 4.9% expansion seen in November, which had marked a record high. The flotation of the Egyptian pound and the hike in regulated prices of subsidized fuels, both of which took place in early November, have led to a build-up of inflationary pressures. According to the Central Agency for Public Mobilization and Statistics (CAPMAS), higher prices were seen across all subcomponents, with those for food, beverages and transport having the biggest impact on the index.

Inflation came in at 23.3% in December. The reading was well above November’s 19.4% and the highest reading since August 2008. Since the pound was floated on 3 November in compliance with IMF demands for the granting of a USD 12.0 billion loan, the value of the Egyptian currency against the U.S. dollar has more than halved. In turn, prices for imported goods and internationally-priced local commodities have gone up dramatically, which, coupled with the scrapping of fuel subsidies and a new value-added tax, is hurting Egyptians’ purchasing power.

Annual average inflation rose to 13.7% in December from 12.8% in November, reaching the highest figure in over seven years.

On 3 November, the Central Bank had already increased the interest rate by 300 basis points, but failure to contain price pressures could prompt fresh interest rate hikes in early 2017. FocusEconomics Consensus Forecast participants are gradually revising their forecasts in the wake of the floating of the pound, and they expect inflation to average 12.3% in calendar year 2016, which is up 0.3 percentage points from last month’s projection. For calendar year 2017, the panel sees average inflation of 13.0%, which is up 0.6 percentage points from last month’s estimate.


Author:, Economist

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Egypt Inflation Chart


Egypt Inflation December 2016

Note: Year-on-year and month-on-month variation of urban consumer price index in %.
Source: Central Agency for Public Mobilization and Statistics (CAPMAS).


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