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Monday, 11 May 2020

Egypt’s inflation rises in April to 5.9%, ahead of expectations

Annual urban inflation in April outpaced analyst expectations, rising to 5.9% from 5.1% in March, according to data out on Sunday from state statistics agency Capmas. Inflation came in at 1.6% on a monthly basis compared to 0.4% during the same month last year, and 0.6% in March. This uptick comes on the heels of a steady price deflation over the two previous months.

Food and beverage prices were the main drivers: The prices for food and beverages rose 4.4 percentage points in April to register an overall increase of 0.9% on an annual basis. Prices are typically driven up by high demand in the run-up to Ramadan. Alcoholic beverages and tobacco products saw their prices increase by 1.1%, to record an annual increase of 8.3%. Transport costs dropped 1.0%, good for an annual rate of 12.2%.

Inflation higher than expected? “We expected a surge in Ramadan but the rate of increase is higher than we had anticipated. In the two weeks preceding the holy month, there was a lot of buying activity and a demand push across the board,” head of research at Naeem Brokerage Allen Sandeep told Reuters. “We could possibly see some easing in May.”

Covid effect? Ramadan demand pushed costs up, but we expect covid-induced hoarding of food and other necessities could also have played a role.

Core inflation also rose: Annual core inflation increased to 2.5% in April, while monthly core prices rose 0.6% from the month before, according to figures released by the Central Bank of Egypt (pdf).

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