Egypt’s Significant Drop in Inflation Rate Marks Economic Recovery

Egypt’s inflation rate fell to 12.5% in February, down from January’s 23.2%. This decline is attributed to a base effect from previous high inflation rates. Monthly inflation was recorded at 1.4%. Economic recovery is bolstered by over $50 billion in international aid and reforms under the IMF. Authorities expect further financial assistance soon.

Recent official data indicates that Egypt’s annual consumer inflation rate has dropped to 12.5% in February, reflecting a recovery from the country’s most severe economic crisis. Despite a steady decline over the past months, analysts attribute this significant reduction from January’s rate of 23.2% largely to a base effect. Economist Wael el-Nahas commented, “when inflation reached 36%, it looks lower because we are comparing it to last year’s extreme price jumps.”
The monthly inflation rate in February stands at 1.4%, slightly lower than January’s 1.6%, as reported by the Central Agency for Public Mobilisation and Statistics. The country’s economy has faced considerable challenges, including a parallel market crisis due to a significant shortage of foreign currency, which caused daily price increases in consumer goods.
Following a recent currency devaluation in March 2024, Cairo appears to be on the mend, aided by over $50 billion in loans and investment from entities such as the World Bank, the United Arab Emirates, and the International Monetary Fund (IMF). It is important to note that the value of the Egyptian pound has fallen more than 60% since February 2022, with inflation peaking around 40% in August 2023.
Authorities have implemented numerous reforms, including a series of fuel price hikes, as part of an IMF agreement that was expanded from $3 billion to $8 billion. The IMF board is expected to consider a $1.2 billion tranche during its upcoming review, with an additional loan agreement projected to exceed $1 billion as revealed by the Washington-based institution last month.

In conclusion, Egypt’s inflation rate has significantly decreased to 12.5% in February, attributed partly to a base effect from past extreme price levels. As the economy seems to recover from previous turmoil, supported by international financial agreements, ongoing reforms and the continued devaluation of the pound are pivotal in shaping future economic conditions. Furthermore, anticipated advancements in loan agreements signify ongoing support from international institutions.

Original Source: newscentral.africa