Egypt’s headline inflation eases to 4.3% in January

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Egypt’s annual urban consumer price inflation eased to 4.3% in January from 5.4% in December, the official statistics agency CAPMAS said on Wednesday.

Month-on-month, the headline indicator fell 0.4%, the same pace of deflation as in December, the agency said.

“A surge in local food stocks as well as low local demand both contributed to inflation slowing in January. Egypt is well-placed to face any upcoming price increases because of the commodity price rallies going on worldwide,” said Allen Sandeepof Naeem Brokerage.

Statistics data showed a drop of 0.4% year-on-year in the prices of food and beverages, driven by a sharp decline in the cost of items such as potatoes, tomatoes and seasonal greens.

Core inflation, which strips out volatile items such as food, fell to 3.673% in January from 3.803% in December, data from the central bank showed on Wednesday.

“We are due for another rate cut, but the timing of it would depend on a few variables including upcoming commodity price shocks, including oil and food, liquidity and carry-trade attractiveness,” Sandeep added.

Egypt’s central bank kept its key interest rates on hold at its last monetary policy meeting on February 4, after slashing rates last year to support the coronavirus-hit economy.

The bank set an inflation target of 5%-9% in December.


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