CAIRO: Egypt’s annual urban consumer and core inflation eased for a second consecutive month in February but rose month on month as food prices continue to climb in the Arab world’s most populous country. Egypt’s government, which is struggling to revive the economy after a 2011 uprising, has been trying to fight food price increases which could fuel public anger.
In November it said it would control the prices of certain essential goods. The central bank also hiked interest rates in December, citing inflationary pressures. Annual urban consumer inflation eased for the second consecutive month to 9.1 percent in February from 10.1 percent in January, the central said on Thursday.
Core inflation, which excludes items such as fruit and vegetables whose prices fluctuate widely, eased to 7.5 percent in February down from 7.73 percent in January. This is the second consecutive decrease in the rates of inflation after the country raised interest rates by 50 basis points in December. While the year on year inflation figures eased, monthly inflation rose with urban consumer prices increasing by 0.97 percent in February compared with a 0.11 percent increase in January, the central bank said in a statement.
“The annual figure is driven a lot by base effect but if you look at the monthly figure it is actually high,” said Hany Genena, an Economist at Beltone Financial, adding that prices for goods still soared despite government attempts to keep them in check.
“Since December the government instituted this program whereby they controlled the prices of selected products for a period of 3-6 months… But that system started to break in February and we started to see selected shortages and significant increases in prices,” he said.
Analysts and bankers say they expect the central bank to hike interest rates at its next monetary policy meeting on March 17. The central bank has been facing mounting pressure to devalue the currency which it is holding artificially strong at 7.7301 pounds per dollar.
