RIYADH: Egypt’s annual urban consumer inflation slowed unexpectedly to 14.9 percent in April from 15.2 percent in March, according to data released by the country’s statistics agency CAPMAS.
On a monthly basis, consumer prices increased 1.1 percent in April. Food and beverage prices declined 0.7 percent month on month, although they were still up 6.7 percent compared to a year earlier.
The easing in inflation came despite expectations of a rise due to the ongoing geopolitical tensions, which drove up electricity prices at the start of the month, weakened the Egyptian currency, and pushed higher commodity costs, particularly for poultry.
Egypt’s annual inflation rate has fallen sharply from its record peak of 38 percent in September 2023, supported in part by an $8 billion financial assistance package agreed with the International Monetary Fund in March 2024.
However, inflationary pressures could intensify again in May following the government’s decision on May 3 to raise natural gas prices for several energy-intensive industries.
Separate central bank data showed Egypt’s net foreign assets dropped by $6.07 billion in March to $21.34 billion, marking the steepest monthly decline since the outbreak of the conflict involving Iran. The fall came during the first full month after the US and Israel launched attacks on Iran.
The conflict has significantly increased Egypt’s energy import costs, hurt tourism revenues, and triggered billions of dollars in portfolio investment outflows as foreign investors retreated from emerging markets amid heightened geopolitical uncertainty.
The March decline followed a $2.12 billion drop in February, when net foreign assets retreated from a record high of $29.54 billion at the end of January. Airstrikes launched by the US and Israel against Iran in late February accelerated the withdrawal of foreign capital from Egypt.
According to Reuters calculations based on central bank figures, commercial banks’ foreign assets fell by around $3.59 billion in March, while the central bank’s foreign assets declined by $697 million. At the same time, net foreign liabilities increased across both commercial lenders and the central bank.
Egypt’s net foreign assets, which combine holdings at the central bank and commercial banks, first turned negative in February 2022 as authorities intervened to support the Egyptian pound against the US dollar.
The position returned to positive territory only in May 2024, following a sharp currency devaluation implemented two months earlier.
Meanwhile, Egypt’s M2 money supply expanded 20 percent year on year in March, central bank data released on Thursday showed. The money supply increased to 15 trillion Egyptian pounds ($285 billion), up from 12.5 trillion pounds in the same month a year earlier.
