Egypt: Annual Inflation Slips in July

Egypt: Annual Inflation Slips in July

Friday, 10 August, 2018 - 10:00
People shop at Al Ataba, a popular market in downtown Cairo, Egypt on December 12, 2017. REUTERS/Mohamed Abd El Ghany
Cairo - Asharq Al-Awsat
Egypt’s annual inflation fell to 13 percent year-on-year in July 2018 from 34.2 percent.

In July, the Central Agency for Public Mobilization and Statistics (CAPMAS) said that Egypt’s annual inflation tumbled to 13.8 percent in June, from 30.9 percent in the same month a year earlier.

Egypt has increased fuel prices by up to 66.6 percent, after a chain of recent decisions to increase prices of water, electricity and metro tickets. The governor of the Egyptian central bank defended the bank’s policies attributing the inflation to spending and not monetary decisions.

In his speech during the inauguration of the Association of African Central Banks meetings, Governor of the Central Bank Tarek Amer said Wednesday that the central banks in the world, and in the region namely, bear unprecedented responsibilities and burdens due to political events and their consequences as well as the instability in the region.

Inflation is a result of spending and not monetary policies, he confirmed.

The Egyptian government seeks to reduce subsidies of petroleum products in the budget of 2018-2019 to EGP89.075 billion (around USD5 billion) from EGP110.148 billion (USD6.2 billion) in the previous budget.

The Ministry of Petroleum revealed previously in a statement that the cost of petroleum product subsidies exceeded the target average end of last year, reaching EGP125 billion (USD7 billion).

The prices of vegetables and fruits rose by 8.8 percent and 3.5 percent respectively, in addition to an increase in alcohol and tobacco prices by 7.2 percent. Moreover, the prices of housing, water, electricity, gas, and fuel rose by 5.2 percent, CAPMAS noted.

“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.

On a monthly basis, inflation increased 2.9 percent in June – Inflation in the past two months is considered remarkably high compared to May’s inflation of 0.3 percent.

In May, Egypt upped prices of metro tickets up to 250 percent, then it announced in June increased electricity prices.

The official gazette in June announced a decision signed by former prime minister Sherif Ismail to increase prices of drinking water and sanitary services up to 46.5 percent, which is the second increase in less than one year.

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