Egypt's inflation surge begins to slow in March

Business Tuesday 11/April/2017 12:30 PM
By: Times News Service
Egypt's inflation surge begins to slow in March

Cairo: Egypt's urban consumer inflation rose at a slower pace in March and core inflation dipped, the first signs of stabilising prices after the shock from a huge currency depreciation.
President Abdel Fattah Al Sisi is under increasing pressure to revive the economy, keep prices under control and create jobs to avoid a backlash from the public.
Urban inflation rose for the fifth consecutive month to reach an annual 30.9 per cent, the official CAPMAS statistics agency said on Monday, its highest point in more than three decades.
However the rise from 30.2 per cent in February was the smallest since Egypt abandoned its currency peg in November, driving up the price of imports.
The pound currency has since depreciated by roughly half and in Egyptian cities and towns, food and beverage inflation reached 41.8 per cent year on year in March.
Annual core inflation, on the other hand, declined for the first time in eight months, reaching 32.25 per cent in March from 33.1 per cent in February, the central bank said in a statement.
"The deceleration in core inflation is in line with the expected headline deceleration in March," said Reham El Desoki, senior economist at Arqaam Securities.
"March 2017 was a month void of significant inflationary pressures, where price rises slowed and a lower customs dollar rate stabilised the cost of imports," El Desoki said
Egypt abandoned its currency peg of 8.8 to the US dollar on Nov. 3 but the pound has been stable around 18 per dollar for the past two weeks.
March's annual urban consumer inflation figure is the highest since June 1986, when it reached 35.1 per cent, according to Reuters data. However, monthly urban inflation eased to 2 per cent in March from 2.6 per cent in February.
The central bank accompanied the November float with a 3 per cent interest rate hike to fight price pressures but inflation is expected to keep climbing as the government pushes on with economic reforms, including fuel subsidy cuts.
The economic reforms helped Egypt secure a $12 billion loan programme from the International Monetary Fund in November.
Egypt's central bank has held interest rates steady at four monetary policy meetings since the currency flotation although some economists expect further rate hikes this year.
IMF mission chief for Egypt Chris Jarvis said in January the fund expects inflation to begin dropping sharply by the second quarter of 2017.