CAIRO – Annual inflation of consumer prices in cities rose to 12.7% in January from 12% in December, said the Egyptian central agency for mobilization and public statistics.
They buy in a fruit and vegetable market in Cairo – Reuters pictures
Inflation has been steadily declining in recent months, after the surge in fuel, electricity and transport prices in 2018 peaked at 17.7 percent in October.
"The increase in inflation came from food and non-alcoholic beverages, whose inflation rate was 0.9 percent on a monthly basis, compared to -6.7 percent in December", stated Allen Sandeep, research director at Naeem Brokerage in Cairo.
The prices of vegetables and fruit in Egypt have increased continuously in recent years, prompting the Ministry of Interior and the army to put some food products for citizens at prices lower than the market price in an attempt to alleviate suffering .
"Food and drink are the main reason for the increase in inflation," said Radwa Suweifi, head of research at the Egyptian investment bank Faros. "What is happening is the adjustment of prices to producers at the start of the new year to adjust margins.
"Do not forget that producers' profit margins have dropped since the first of July, with the reduction of support, and some have not increased prices, fearing a decline in sales.
Last year, the government raised oil product prices, subway tickets, water and electricity and a number of services.
The Egyptians, millions of whom live below the poverty line, complain about the difficulties in meeting basic needs after the subsequent leaps of fuel, medicines and transport prices.
Compared to the previous month, consumer prices in Egyptian cities increased by 0.6 percent in January, after falling 3.4 percent in December.
"The monthly increase is higher than expected and this could be an indication of the stabilization of the interest rate at this week's central meeting in anticipation of inflation next month," Suweifi said.
"Interest rate speculation continues on Thursday," said Sandeep.
The central bank kept key interest rates unchanged at the December meeting. The last interest rate occurred in March 2018, when the yield on overnight deposits and loans reduced by 16 basis points 16.75% and 17.75% respectively.
Although the January reading is higher than Beltone's forecast of 11.9%, it still expects inflationary pressures to remain weak in the first half of this year, said Alia Mamdouh, director of finance and strategy. of Beltone Financial.
The central bank said Sunday's core inflation, which excludes volatile materials such as food, rose 8.6% year-on-year in January from 8.3% in December.
Media coverage Ihab Farooq – Additional reportage by Yousef Saba – Prepared by Hala Kandil for the Arab Bulletin – by Abdel Moneim Darar