Egypt’s annual headline inflation rate rose to an all-time high of 38.2 percent in July, according to data published by the Central Agency for Public Mobilization and Statistics (CAPMAS), on Thursday, 10 August.
The increase in the annual headline inflation rate is mainly due to a 68.2 percent hike in food and beverage prices, 51.9 percent in alcohol and tobacco products, and 50.3 percent in restaurants and hotel services.
Egypt’s annual headline inflation jumped from 36.8 percent in June 2023, also an all-time high.
The Central Bank of Egypt (CBE) recently raised its interest rates by 100 points to avoid inflationary pressures and control inflation expectations. The CBE’s Monetary Policy Committee expected inflation rates to peak in the second half of 2023.
The USD 3 billion (EGP 68 billion) loan package given to the CBE by the International Monetary Fund (IMF) in October 2022 initially intended to decrease inflation through two targets – lowering the average inflation rate to seven percent by Q4 2024, and then to five percent by Q4 2026.
However, Egypt continues to struggle in meeting the loan’s conditions.
Since the outbreak of the Russia-Ukraine war in March 2022, Egypt has been facing economic pressures related to supply shocks for foodstuffs such as wheat, in addition to a shortage of foreign currency. Coupled with successive devaluations of the Egyptian pound, inflation has skyrocketed.
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