Egypt’s inflation rate dropped to 12.8% in February from 24.0% in January, exceeding expectations. Food prices rose slightly while the money supply increased significantly, contributing to inflation trends. Measures taken, including currency devaluation and an IMF support package, aim to stabilize the economy.
In February, Egypt’s annual urban consumer price inflation fell dramatically to 12.8%, down from 24.0% in January, according to data from the Central Agency for Public Mobilization and Statistics (CAPMAS). This decline exceeded analysts’ expectations, who had anticipated a drop to around 14.5%. Despite the month-on-month rise of 1.4% in February, the easing inflation is attributed to the prior stark increases no longer influencing the current statistics.
Food and beverage prices saw an annual increase of 3.7%, exhibiting a slight rise of 0.2% from January. This inflation trend has been on the rise since early 2022, largely affected by the aftermath of the Russian invasion of Ukraine, which led to significant foreign capital withdrawals from Egyptian treasury markets. Comparatively, headline inflation peaked at 38.0% in September 2023.
The surge in prices was partly driven by a substantial increase in the money supply, which grew by 32.1% year-on-year through the end of January, as reported by the central bank. In response to these economic challenges, Egypt devalued its currency last year, raised interest rates by 600 basis points, and secured an $8 billion support package from the International Monetary Fund, measures aimed at stabilizing the nation’s finances.
In summary, Egypt’s headline inflation has significantly decreased to 12.8% in February, marking a notable reduction from 24.0% in January. This decline is primarily attributed to the diminishing impact of previous high inflation rates. The central bank’s financial adjustments and the international support package from the IMF have played a crucial role in managing the economy amid challenging conditions influenced by external factors.
Original Source: www.zawya.com
