CAIRO: Egyptian urban inflation hiked to a fresh record high of 20.2 percent in the year to June, up from 19.7 percent in the year to May, CAPMAS said on Thursday.
The state statistics agency explained the new June rate was driven by monthly price rises in food and entertainment, while transport costs stabilized, Reuters reported.
Egypt inflation rate has recently been jumping to record highs, the latest of which was in May to 21.1 percent, mainly triggered by the government s decision to raise energy prices.
Soaring inflationary pressures have hit the poor hardest in Egypt, where about 20 percent of the country s 76.5 million people live below the poverty line of about $2 per day.
In early June, thousands of demonstrators fought with police after a protest over flour rations in a town on Egypt s Mediterranean coast. In the last two months, 11 people have died in clashes while standing in line to buy subsidized bread.
However, according to CAPMAS, overall price increases slowed on a monthly basis. Urban inflation rose 0.6 percent in the month to May versus 2.7 percent in the month to May. Food and beverage price increases slowed in June, rising 0.8 percent compared to 3.6 percent a month earlier.
Prices for culture and entertainment rose 9 percent in the month to June, but all other price baskets including for utilities and transport showed zero inflation for the month.
Figures indicate there is a slow-down [in inflation rises], and we can’t deny the figures, said Reham El-Dessouki, senior economist at Beltone Financial.
But I can t [foresee] a slowdown in overall inflation rates either next month or the one afterwards.
Beltone Financial initially expected that the year-on-year consumer price index (CPI) would hover around 22 percent in June and the annual average to be 11.8 percent based on a monthly increment around 2 percent.
However, she added that the implied drop in the June figure is a positive development indicating a drop in inflationary pressures in June. She cited the government s decisions to reduce customs duties on imported food stuffs, ban exports of cement and rice, increase subsidies on food products and could as possible contributors to this decline.
The Central Bank of Egypt had simultaneously hiked its overnight interest rates four times since the beginning of the year by a cumulative 1.75 percent to 10.5 percent and 12.5 percent.
While we view the drop in the pace of price rises in June as positive, we expect inflation will remain high in the medium term, and especially in the next six months, in the lead up to summer, the month of Ramadan and holiday season, El-Dessouki pointed out.
Inflationary pressures have weighed on Egypt s banking system, with the ratings agency Moody s lowered its outlook for Egypt s foreign currency bonds as well as five Egyptian banks from stable to negative yesterday, citing inflation that has reached its highest level in 20 years.