Egypt: Inflation eases in January
Consumer prices fell 0.42% from the previous month in January, a sharper drop then December’s 0.41% decline. January’s result marked the sharpest fall in prices since June 2019. The result was primarily driven by plunging prices for food and beverages. In addition, price pressures for transportation also decreased at a faster pace.
Inflation eased to 4.3% in January, from December’s 5.5%. January’s reading represented the weakest inflation rate since September 2020. Accordingly, the trend pointed down mildly, with annual average inflation coming in at 4.8% in January (December: 5.0%). Core inflation fell to 3.6% from the previous month’s 3.8%.
Regarding January’s reading, Farouk Soussa, economist at Goldman Sachs, commented:
“[The] lower than expected inflation print mechanically lowers our near-term inflation projections while reaffirming the likelihood that inflationary pressures will remain subdued in the medium term. We now expect inflation to average 4.5% yoy in 2021, compared with our previous forecast of 5.0% yoy. We expect inflation to rise in the summer, mainly due to energy price increases as well as base effects, but to stabilise at around 5% in the medium term, at the lower end of the CBE’s new inflation target of 7% +/- 2pp.”