CAIRO: Egypt’s annual urban consumer price inflation decreased to 28.1 percent in May from 32.5 percent in April, slowing even faster than analysts had expected, data from the statistics agency CAPMAS showed on Monday.
A poll of 19 analysts had forecast inflation to decrease to a median 30.4 percent, continuing a slowing trend that started in September, when inflation peaked at 38.0 percent. Food prices in May were 31.0 percent higher than in May 2023.
May was the third straight month of declines since a surprise surge in prices in February. Month on month, prices fell by 0.7 percent in May, while food prices dropped by 3.0 percent.
Inflation has been elevated for the past year, driven largely by rapid growth in the money supply.
Earlier this month, Egypt’s Planning Minister Hala al-Saeed predicted the country’s economy would grow by 2.9 percent or 3 percent in the financial year to end-June before accelerating to 4.2 percent in 2024/25, according to a ministry statement.
The growth would come from investment spending, net exports and imports and consumer spending, Saeed said.
During International Monetary Fund talks in Washington on April 16, Finance Minister Mohamed Maait predicted 2.8 percent growth this year and 4.2 percent in 2024/25.
The economy had been dragged down by a chronic lack of foreign currency. But that has been alleviated by a $24 billion real estate deal with the UAE in late February, plus a sharp devaluation of the currency and the signing of an $8 billion agreement with the IMF in early March.
The central bank on May 23 said growth had slowed to 2.3 percent in the fourth quarter of 2023 from 4.2 percent a year earlier and that indicators suggested growth would remain subdued in Jan-March 2024.
On June 6, the IMF said that it reached a staff-level agreement with Egypt on the third review of an expanded IMF loan program, which would disburse about $820 million to Cairo upon board approval.
The agreement follows a May 12-26 IMF mission to Cairo to review Egypt’s reform performance under an Extended Fund Facility loan that was expanded to $8 billion in March from an original $3 billion loan agreed in December 2022.
The IMF said in a statement that Egypt’s efforts to restore macroeconomic stability are making some progress, despite a difficult regional environment marked by spillovers from the war in Gaza and Red Sea shipping disruptions that have hurt Suez Canal receipts.
