ShareCAIRO: Egypt’s annual urban inflation rose last month to its highest level in six years, mostly on the back of soaring food prices linked to the decline in the value of the local currency, state statistics agency Capmas said on Monday. Inflation climbed to 32.7 per cent in March from 31.9 per cent the previous month, it said. While the rate of increase was below analysts’ forecasts, it is expected to hit consumers hard in a country where half of the 104 million population are poor or hovering just above the poverty line.
On a monthly basis, prices grew 2.7 per cent in March, compared with 6.5 per cent in the previous month. The slower pace of increase is partially statistical because declines in the currency a year ago created a high base of comparison. The latest annual inflation figure is narrowly below the all-time high of 32.952 per cent in July 2017, less than a year after Egypt devalued its currency by half as part of a $12 billion support package offered by the International Monetary Fund. Egypt has devalued its currency three times since last March, slicing the pound’s value by nearly 50 per cent.
But a persistent shortage of foreign currency and the subsequent delays in getting imports into the country have continued to play havoc with the economy, placing the pound under continuing pressure. Egypt, the most populous Arab nation, imports roughly half of its food. It is one of the world’s largest wheat importers, with bread the main staple for the overwhelming majority. At least 70 million Egyptians buy bread at a heavily subsidized price. Contributing to the rise in March’s annual inflation was an increase in fuel prices last month and higher-than-usual demand for food items during Ramadan, which began in the third week of last month.
The government blames the country’s economic woes entirely on the fallout from the Russia-Ukraine war, but critics claim that significant spending on national infrastructure projects over the past decade, excess borrowing and lack of transparency have been contributing factors. However, President Abdel Fattah El Sisi, a former general who has been in charge of the economy since taking office in 2014, is confident that the country will pull through the crisis. Earlier this year, in a bid to secure foreign currency, his government announced plans to offer stakes in 32 state enterprises, including banks and military-owned companies, to investors. – Agencies
