CAIRO - Egypt's urban consumer price inflation rate is likely to climb back towards record highs in May, a Reuters poll showed on Tuesday, as higher fuel prices and an increase in ration card and food prices take their toll.
The median forecast of 13 analysts polled showed annual urban consumer inflation climbing to 31.4% in May from 30.6% in April. Egyptian inflation hit an all-time peak of 32.952% in July 2017 after a prolonged currency crisis the year before.
"Inflation will be driven mostly by a rise in fuel oil prices, as well as the government's decision to boost the prices of key products provided to ration card holders," said Mona Bedeir of Al Baraka.
Al Baraka expected core inflation, which excludes fuel and some volatile food items, to rise to 40.0% from 38.6% in April, although a median of six analysts expected it to inch down to 38.5%. Core inflation hit a record high of 40.26% in February.
"We anticipate core inflation to resume its rising trajectory, driven by the second round impact of fuel price increases mainly on food and transportation, as well as a jump in core commodity prices, namely meat, as Eid season feeds demand," Bedeir added.
Capital Economics forecast headline inflation to climb to 30.9% year on year, saying the continued effects of a weaker currency would push food inflation higher despite sliding global commodity prices.
"Indeed, the next few months could see the headline rate hover around 31-32% year on year," it said.
Egypt has devalued its currency by half since March 2022 after fallout from Russia's invasion of Ukraine exposed its economic vulnerabilities, but it has left the exchange rate fixed against the dollar for the last three months.
The continuing high inflation puts pressure on the central bank to increase its overnight interest rate when its Monetary Policy Committee (MPC) next meets on June 22.
The MPC left its deposit rate unchanged at 18.25% when it last met on May 18, bringing total hikes since March 2022 to 1,000 bps.
The state statistics agency CAPMAS is scheduled to release May inflation data on Thursday morning.
(Writing by Patrick Werr; Polling by Anant Chandak; Editing by Sharon Singleton)