Egypt consumer inflation rises to 17-month high

Egypt's annual urban consumer price inflation rose to 5.7 percent in August, up from 5.4 percent in July, official statistics agency CAPMAS reported on Thursday, a 17 month high.

Month-on-month headline inflation slowed to 0.1 percent in August, from 0.9 percent in July, the agency said.

Capital Economics, suggested inflation was likely to remain high over the coming months and would make a hold on interest rates more likely by the central bank's monetary policy committee at it's meeting next week. 

Food inflation was the key driver jumping from 4.9 percent y/y in July to 6.6 percent y/y in August, the highest for two years. The economics research company said it's forecast of a higher headline inflation rate in the coming months was on the back of stronger food and energy inflation. 

Separately, the Egyptian Central Agency for Public Mobilization and Statistics announced that annual inflation levels in Egypt rose to 6.4 percent last August, compared to 6.1 percent in July.

The agency added in a statement, today, that the general consumer price index for the whole of the republic recorded 114.3 points for the month of August 2021, a decrease of 0.1 percent from July. The decrease was put down in part to the fall in prices of some food stuffs as well as clothing.

CE added that the government mooted hiking the price of state-subsidised bread, which coupled with the recent hike to local fuel prices, will push the headline rate up further. Global factors, such as rising commodity prices, freight costs and supply shortages will also add to price pressures, CE said. 

It also forecast a weakening in the pound causing inflation to push further up on imported goods.

However, despite the inflationary pressures in the short- term the company believes that inflation will drop back sharply in very-late 2021 and could possibly fall below the lower bound of the CBE’s target range. Inflation would then likely hover around the lower bound over 2022-23.