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Tuesday, 11 August 2020

Egypt’s inflation decelerated in July to 4.2%, below expectations

Annual headline inflation decelerated to 4.2% in July, down from an uptick to 5.6% in June, according to central bank figures (pdf). The central bank attributed the decline to a favorable base effect. Monthly headline urban figures remained restrained at 0.4% in July, compared to 1.8% during the same month last year, and to 0.1% in June. Head of research at Naeem Brokerage Allen Sandeep described the drop in the annual rate as a “positive surprise,” Reuters reports.

Food prices continue their decline, electricity spikes up: Food and drinks prices fell for the third consecutive month, dropping 1.5%, according to state statistics agency Capmas. All food items saw price drops, with the exception of fruits, the prices of which rose 9.7%. Lower-than-customary consumer demand ahead of and during Eid El Adha last month was likely due to concerns over spending at a time of uncertainty, Sandeep told the newswire service. Electricity and energy prices rose by 11.6% — following rate increases that came into effect on 1 July — contributing to the 2.2% annual increase in July for the housing, water and energy bracket.

Core inflation falls: Annual core inflation, which doesn’t account for volatile items such as food and fuel, recorded 0.7% in July from 1.0% in June. The price of core items fell -0.1% during the month, compared to a 0.3% increase in June.

Forecast ahead: Pharos Holdings expects the annual inflation rate to moderately climb to 4.5% in August, 5-5.5% in September through to November, and end the year at 6%, head of research Radwa ElSwaify told Enterprise.

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