Egypt urban inflation jumps to 35.7pc in Feb as currency devaluation is expected to inflict more pain

CAIRO (Reuters): Egypt’s annual urban consumer price inflation jumped to 35.7 per cent in February from 29.8pc in January, driven mainly by a rise in food prices, data from statistics agency CAPMAS showed on Sunday.

The increase in inflation comes well before a surge expected to result from last week’s Egyptian pound devaluation. The central bank on Wednesday allowed the Egyptian pound to fall to about 50 to the dollar from 30.85, where it had been fixed for the past 12 months.

Egypt also opted for interest rate hikes by 6pc as it successfully secured an $8 billion deal with the IMF by meeting the key demands set by the world’s top lender. However, the move is expected to inflict more pain on the people who are already crushed by rising costs of living and shrinking purchasing power.

A poll of 14 analysts had expected February inflation to slow to a median 25.1pc. Before February, Egypt inflation rate had been falling from a historic high of 38.0pc in September.

Month-on-month, prices rose by 11.4pc in February, up from just 1.6pc in January. Food prices leapt by 15.9pc, up from 1.4pc in January.

“The sharp rise in the annual reading was fuelled by a surge in monthly inflation of both food (food and beverages) and non-food items and was in spite of the favourable base year contribution of -5.5pc,” Allen Sandeep of Naeem Brokerage said in a note.

Core inflation, which excludes fuel and some volatile food items, rose to 35.1pc in February from 29pc in January, the central bank said later on Sunday.