Egypt Inflation October 2016

Egypt

Egypt: Egyptian inflation eases for second month in October

November 10, 2016

In October, consumer prices rose 1.7% from the previous month, which was above September’s 1.3% increase. According to the Central Bank, the stronger rise was largely the result of higher prices for regulated items, particularly electricity, which more than offset a notable decrease in prices of fruits and vegetables.

Inflation came in at 13.6% in October. The reading was below September’s 14.1% log and marked the second consecutive month of deceleration after inflation figures had reached an over-seven year high in August. Although October’s result provided further respite from soaring prices, it was mostly driven by a favorable base effect. In addition, the recent floatation of the pound and the removal of subsidies on fuel products will likely heighten inflationary pressures towards the end of this year and at the outset of next year.

Meanwhile, annual average inflation rose to 12.1% in October from 11.7% in September, the highest level since October 2009. Core inflation, which excludes volatile items such as fresh fruit and vegetables, came in at a record-high 15.7% in October, markedly above September’s 13.9% reading.

On 3 November, the Central Bank increased its main interest rate by 300 basis points in an attempt to counter the effects that a plummeting pound and the scrapping of subsidies could have on consumer prices. 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 October 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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