Egypt’s Inflation Rate Drops to 12.8% in February

Egypt’s headline inflation fell to 12.8% in February from 24.0% in January, exceeding expectations amid easing price pressures. Monthly prices rose by 1.4%, while food and beverage costs saw a 3.7% annual increase. Previous inflation spikes were influenced by external factors, but financial reforms have begun to stabilize the economy.

Egypt’s annual urban consumer price inflation has significantly dropped to 12.8% in February, a considerable decrease from 24.0% in January. This decline surpassed analysts’ expectations, as data from the Central Agency for Public Mobilization and Statistics (CAPMAS) revealed. Analysts attribute this decrease to the base effect, where previous high price hikes no longer influence current statistics.

A Reuters poll of fifteen analysts projected a median inflation rate of 14.5%. Month-on-month inflation indicated a 1.4% rise from January to February. Annual food and beverage prices increased by 3.7%, reflecting a smaller monthly uptick of 0.2% since January.

Inflation had escalated since early 2022, following the Russian invasion of Ukraine, which led to significant capital flight from Egyptian treasury markets. Notably, headline inflation peaked at 38.0% in September 2023, driven in part by a rapid increase in the money supply, with M2 expanding by 32.1% year-on-year until January.

A year prior, Egypt executed a sharp currency devaluation, raised interest rates by 600 basis points, and secured an $8 billion financial support package from the International Monetary Fund. These measures have contributed to stabilizing Egypt’s financial situation.

In conclusion, Egypt’s inflation rate has experienced a significant decrease to 12.8% in February, marking a dramatic shift from previous highs largely influenced by external factors such as geopolitical tensions. Despite short-term price increases, the economy appears to be stabilizing following strategic financial measures taken by the government and the central bank. Continued monitoring of inflation trends in the coming months is essential as the country navigates economic recovery.

Original Source: www.zawya.com