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.
Author: David Ampudia, Economist