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.
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