Inflation cools in July to 13.5% after surge in June
Inflation cools in July to 13.5% after surge in June: Annual headline inflation cooled to 13.5% in July, down from a high of 14.4% in June, according to data released by the central bank on Thursday (pdf). Monthly headline inflation reached 2.5% in July, according to data from CAPMAS. Annual core inflation — the CBE’s preferred gauge, which strips away volatile items such as food — sank further in July to 8.5%, down from 10.9% in June. Inflation levels in June had accelerated for the first time in a year and at a much faster pace than expected, after dropping to a two-year low in May, as a result of subsidy cuts to fuel, power, and transportation in July. “We expected the hike to be fully apparent in June and the reduced spending levels would let the impact fade away in July,” Beltone Financial’s Alia Mamdouh tells Reuters.
Analysts still expect the CBE’s Monetary Policy Committee (MPC) to keep the country’s key interest rates on hold at its 16 August meeting, despite the decline in inflation rates, the newswire notes. A number of experts had suggested last month that the MPC is likely to keep overnight deposit and lending rates unchanged at 16.75% and 17.75%, respectively, until the end of the year to allow the economy more time to fully absorb the shock of price hikes.