Egypt: Headline and core inflation soar to record highs in June
Inflation increased to 35.8% in June, following May’s 32.7%. June’s figure was a record high and close to four times the upper bound of the 5.0–9.0% target range of the Central Bank of Egypt (CBE). Looking at the details of the release, the acceleration largely reflected stronger increases in prices for transport and for food and non-alcoholic beverages, with the latter rising 65.8% year on year. The Egyptian pound has lost roughly 20% of its value against the U.S. dollar so far this calendar year, contributing to increased price pressures.
Consequently, the trend pointed up, with annual average inflation coming in at 24.4% in June (May: 22.5%). Meanwhile, core inflation rose to 41.0% in June from the previous month’s 40.3%. June’s core inflation reading was also an all-time high.
Finally, consumer prices increased by 2.12% in June over the previous month, which was below the 2.72% rise seen in May.
These developments are putting pressure on the CBE to deliver another aggressive interest rate hike at its next meeting, set for 3 August, after it held fire at its last two meetings in May and June in order to assess prior rate increases.