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| 09 August, 2018

Egypt's inflation eases in July

Egypt's urban consumer price inflation slowed to an annual 13.5 in July from 14.4% in June

Egyptians buy fruits from street vendor at the central of Cairo, Egypt July 24, 2017. Picture taken July 24, 2017.

Egyptians buy fruits from street vendor at the central of Cairo, Egypt July 24, 2017. Picture taken July 24, 2017.

Reuters/Amr Abdallah Dalsh

CAIRO  - Egypt's annual inflation rate dropped in July after a surge a month earlier when cuts to energy subsidies imposed under an IMF loan deal hit the economy.

Egypt's urban consumer price inflation slowed to an annual 13.5 percent in July from 14.4 percent in June, the official statistics agency CAPMAS said on Thursday.

Core inflation meanwhile fell to the lowest rate since March 2016 - 8.54 percent in July, from 10.9 percent in June, central bank data showed.

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The figure strips out volatile items such as vegetables, fruit and items with regulated prices such as fuel.

Prices had soared after the import-dependent country floated its currency in November 2016, reaching a record 33 percent in July 2017. Inflation rates have since gradually eased, reaching their lowest levels in almost two years in March.

But in June, annual urban consumer inflation quickened to 14.4 percent, as cuts to energy subsidies imposed under an International Monetary Fund loan agreement hit the economy more than expected.

"We expected the hike to be fully apparent in June and the reduced spending levels would let the impact fade away in July," said Alia Mamdouh, lead economist at Beltone Financial.

Egypt has raised fuel, electricity and transportation prices over the past months to help meet the terms of the $12 billion IMF loan programme it agreed to in late 2016. The programme calls for tax increases and deep cuts to energy subsidies.

The central bank will next meet on Aug. 16 to set interest rates. Despite the fall in inflation, analysts expect the bank to keep deposit and lending rates unchanged. (Reporting by Amina Ismail; Editing by Alison Williams)

© Reuters News 2018