Cityscape in Egypt

Egypt Inflation February 2022

Egypt: Inflation jumps to 32-month high in February

Consumer prices rose 1.57% in February over the previous month, picking up from January’s 0.85% increase. February’s result was the highest reading since October 2020. The reading was driven by rising prices for food and non-alcoholic beverages, as well as for transportation.

Inflation climbed to 8.8% in February, above January’s 7.3%. February’s result represented the highest inflation rate since June 2019. Consequently, the trend pointed up, with annual average inflation coming in at 5.8% in February (January: 5.5%). Lastly, core inflation increased to 7.2% in February, up from January’s 6.3%.

Farouk Soussa, analyst at Goldman Sachs, reflected:

“Global commodity prices have continued to trend upwards and our analysis shows a greater correlation between these and domestic prices in the post pandemic period. […] Since the start of the year, Egypt has raised the domestic price of sugar and gasoline. As commodity prices surge in the aftermath of Russia’s invasion of Ukraine, more such moves become likely. By far the most significant impact would come from any adjustment to bread subsidies. We think potential disruption to wheat supplies from Russia/Ukraine (which make up 85% of Egyptian imports) and rising costs increase the likelihood of this in the near term. Even a modest reduction in bread subsidies could be significant from an inflation perspective.”

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