Non-oil private sector activity in Egypt recorded a contraction for the 26th consecutive month, with businesses negatively affected by high inflation and a persistent shortage of foreign currency.

The purchasing managers' index for Egypt - issued by "Standard & Poor's Global" - decreased to 45.5 points last January, compared to 47.2 points in the previous December, which is far below the neutral level of 50 points, which indicates growth of economic activity.

The institution said that the Egyptian non-oil economy suffered from a sharp contraction in operating conditions last January, as the pound's decline led to a significant acceleration in price pressures.

The sub-index for total input prices rose to 72.3 points, compared to 65 points last December, while the sub-index for purchase prices increased to 72.7 points, its highest reading since the months that followed the halving of the currency value, after a previous agreement with the IMF. International in 2016.

The sub-index for purchase prices recorded 64.3 points in December.

And "Standard & Poor's Global" added that nearly half of the companies surveyed have seen an increase in purchasing costs since the end of last year;

This led to a strong and rapid rise in total expenditures.

inflationary pressures

The Central Agency for Public Mobilization and Statistics reported last month that core inflation in Egypt jumped to the highest level in 5 years at 21.3% last December.

Standard & Poor's Global indicated that increasing inflation pressures and the impact on demand led to a sharp contraction in production across the non-oil sector last January.

And it quoted some companies as saying that the import restrictions led to more shortages in supplies, which hindered activity and contributed to the continuous rise in the backlog.

The production sub-index fell to 42.3 points last January, compared to 44.8 points in December, and the new orders sub-index fell to 42.6 points from 45.5 points.

Egypt still suffers from a shortage of foreign currencies, despite the devaluation of the Egyptian pound by about 50% since last March, and the country's conclusion of an agreement with the International Monetary Fund on a new $3 billion bailout package in December.

The economist at "Standard & Poor's Global" David Owen said that the dollar shortage has greatly increased the economic challenges facing Egypt in 2022, and is likely to remain a major problem this year.

Accordingly, business expectations for the next 12 months fell to their third lowest level on record, with firms expecting supply and price issues to further hamper demand.