Food commodities led the consumer price index in Egypt to rise (Al Jazeera)
Annual inflation (price levels) in Egypt rose last February to 36% from 31.2% in the previous January, according to data from the Central Agency for Public Mobilization and Statistics.
The rise in inflation last month was driven by an annual increase in the prices of food and beverages by 48.5%, an increase in the prices of clothing by 26.1%, and an increase in the prices of housing, water, electricity, gas and fuel by 11.2%, according to consumer price index data issued on Sunday.
The prices of furniture, fixtures, household equipment, and maintenance increased by 38.4%, while health care prices increased by 25.7%, and transport and communications prices recorded an increase of 17.6%.
Telecommunications prices grew by 12.8%, prices for the culture and entertainment section of the Consumer Price Index rose by 46.6%, and the cost of education increased by 12.3%.
As for the Restaurants and Hotels section, its price index increased by 41.5% due to the increase in the prices of the ready-made meals group by 41.7%, and the hotel services group by 24.7%.
On a monthly basis, the inflation rate increased to 11% during the past month of 2024 from 1.7% last January.
Reducing inflation
Governor of the Central Bank of Egypt, Hassan Abdullah, said that Cairo aims to reduce the inflation rate to single digits (below 10%) in the medium term, after the bank liberalized the exchange rate of the pound and raised interest rates by 600 basis points during an extraordinary meeting last Wednesday.
The Egyptian Prime Minister said on Wednesday that the International Monetary Fund would increase its current program to lend Egypt $5 billion to $8 billion, at a time when the Central Bank allowed the pound to fall, and said that it would allow freedom of currency circulation.
The new agreement is an expansion of the $3 billion, 46-month Extended Fund Facility that the International Monetary Fund concluded with Egypt in December 2022, one of whose main provisions was the shift to a more flexible exchange rate system.
bog down
The program faltered when Egypt returned to intervention in managing the exchange rate, in addition to delays in an ambitious program to sell state-owned assets and enhance the role of the private sector.
Egypt is also seeking a separate loan from the IMF's Sustainability and Resilience Fund, which promotes financing the climate transition.
Prime Minister Mostafa Madbouly said that the additional loan would amount to $1.2 billion, but the head of the IMF mission to Egypt, Ivana Vladkova Hollar, said that discussions on that request would continue separately.
Vladkova Hollar added to reporters that the fund does not seek a “specific reduction” of the Egyptian pound, but rather a “sustainable move” towards a unified exchange rate determined by the market.
Source: Al Jazeera + Reuters