Increase in Egypt’s Headline Inflation

Egypt’s annual urban consumer inflation accelerated to 4.9% in June from 4.8% in May, official statistics agency CAPMAS said on Thursday, a slower pace of increase than expected. Month-on-month inflation slowed to 0.2% from 0.7% in May, the agency said. A slowdown in monthly inflation of food items was behind the latest figures, Allen Sandeep of Naeem Brokerage said.

However, inflation could pick up in July and August after an average 15% increase in power prices from this month and the likelihood of a fuel price hike, he added. Egypt’s central bank has set an inflation rate target of 7%, plus or minus 2% percentage points. “The numbers are lower than expected and also lower than the central bank’s target, especially in light of the rise in global commodity prices,” Radwa El-Swaify of Pharos Securities Brokerage said. The central bank last cut interest rates in November, and holds its next interest rate meeting on Aug. 5.