Egypt’s Inflation Drops to 12.8% in February, A New Economic Outlook

Egypt’s consumer price inflation fell to 12.8% in February from 24.0% in January, exceeding expectations amidst easing price pressures. Monthly prices increased by 1.4%, while food prices rose by 3.7% year-on-year. Economic stabilization efforts following the Russian invasion of Ukraine have contributed to these changes.

Egypt’s annual urban consumer price inflation significantly decreased to 12.8% in February, down from 24.0% in January, according to the Central Agency for Public Mobilization and Statistics (CAPMAS). This decline was faster than economists anticipated, highlighting the effects of reduced price spikes from recent years. Analysts had forecasted a median inflation rate of approximately 14.5%.

In addition to the annual decline, February experienced a 1.4% rise in prices compared to January. Food and beverage costs rose by 3.7% year-on-year, with a modest increase of 0.2% since January. The escalation in inflation commenced in early 2022, largely influenced by the financial ramifications of the Russian invasion of Ukraine, which led to substantial withdrawals of foreign investments from Egyptian treasury markets.

The peak of inflation occurred in September 2023, when it reached a noteworthy 38.0%. This surge was partly driven by a rapid increase in the money supply, which rose by an unprecedented 32.1% in the year leading to the end of January, as indicated by central bank data. In response to these challenges, Egypt had devalued its currency, increased interest rates by 600 basis points, and entered into an $8 billion financial assistance agreement with the International Monetary Fund to stabilize its economy.

In summary, Egypt’s inflation rate has notably decreased to 12.8% in February from 24.0% in January, reflecting a significant easing in price pressures. Despite the ongoing challenges stemming from external economic factors, measures such as currency devaluation and strategic loans from international organizations have been implemented to manage the country’s financial health. Overall, the situation appears to be improving, although food prices continue to exert upward pressure on inflation.

Original Source: www.zawya.com