Egypt headline inflation sees surprise dive to 9.4% in June

Wed, 2019-07-10 06:57

CAIRO: Egypt’s annual urban consumer price inflation fell
sharply to 9.4% in June from 14.1% in May, official statistics
agency CAPMAS said on Wednesday, a significantly bigger drop than
analysts had expected.
Analysts said the deceleration was partly due to last year’s high
base effect and lower vegetable prices, which are often a key
contributor to high inflation.
“That’s a bigger than expected drop,” said Allen Sandeep,
head of research at Naeem Brokerage. “Good news for the markets,
as this could raise hopes for a rate cut tomorrow.”
The Central Bank of Egypt’s monetary policy committee will meet
on Thursday. It held rates steady at its last two meetings, in May
and March, after a surprise cut in February.
Of 15 contributors to a Reuters poll, Naeem was the only one to
predict a cut on Thursday.
Urban inflation fell month-on-month in June by 0.8% after rising by
1.1% in May, the statistics showed.
“It’s due, in part, to last year’s high rates and also to
some falling vegetable prices,” said Angus Blair, chairman of
business and economic forecasting think-tank Signet.
Vegetable prices rose 17.6% year-on-year in June, but fell 10%
compared to May, CAPMAS said.
Egypt raised fuel prices last week by between 16% and 30% as part
of an IMF-backed economic reform program that saw inflation rise to
a high of 33% in 2017.
While economists had predicted a softer deceleration in inflation
in June, most continued to predict the bank would hold rates until
the fuel price hikes’ impact is tested.

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Egypt’s central bank seen holding key interest rates
Source: FS – All-News-Economy
Egypt headline inflation sees surprise dive to 9.4% in June