Egypt’s annual headline inflation reached a record high of 36.5% in July, aligning with analysts’ projections as the increase was primarily driven by a surge in food prices, as indicated by data from the country’s statistics agency, CAPMAS, reported on Thursday.
In June, headline inflation had reached 35.7%, marking another record high. On a monthly basis, prices increased by 1.9% in July, a decrease from the 2.08% rise observed in June.
According to a median forecast from 15 analysts surveyed, urban consumer inflation is anticipated to have surged to 36.5% in July. This surpasses the previous record high of 32.95% registered in July 2017.
In July, food and beverage prices increased by 68.4% on an annual basis, according to CAPMAS.
Sara Saada from CI Capital, which had predicted July’s inflation to be at 35.4%, explained, “Food prices were mainly impacted by a 9.1% monthly increase in fruit prices and 4.8% in vegetable prices, which are largely volatile and are excluded from core CPI.”
Even as the monthly rate decreased to 1.9%, Noaman Khalid from NBK noted that an unfavorable base effect from the previous year persistently drove inflation upwards.
“If policy makers devalue the currency in the coming period in preparation to the IMF review, inflation could peak at 40% at the end of the year. Otherwise it should drop to 30% by December,” said Noaman. NBK had forecast inflation at 36.5%.
In December, the IMF sanctioned a $3 billion Extended Fund Facility loan for Egypt, spanning 46 months. This decision was prompted by economic vulnerabilities that became evident in the wake of the Ukraine crisis.
The initial six-month assessment, initially planned for March, has been postponed due to the government’s requirement to first fulfill its commitment to implement a flexible currency exchange rate and increase the sale of state assets.