The Central Bank of Egypt (CBE) has announced that the country’s annual headline urban inflation declined to 4.3% in January 2021, from 5.4% in December 2020.
This comes as monthly headline urban inflation recorded – 0.4% in January 2021, compared to 0.7% in January 2020.
The monthly headline urban inflation during January 2021 was mainly driven by lower tomato prices, which contributed – 0.7% to monthly headline inflation. This marked the strongest monthly decline in tomato prices on record.
The decline came as tomato prices continued their reversal of the transitory shock witnessed during November 2020, as expected.
This was only partly offset by seasonally higher prices of poultry, as well as by higher prices of fresh fruits for the second consecutive month. Prices for the remaining CPI basket items also contributed marginally to monthly headline inflation.
Accordingly, the annual decline in January 2021 was mainly driven by the lower annual contribution of fresh vegetables. It was also affected, albeit to a lesser extent, by the lower annual contribution of other CPI items.
This comes as annual food inflation declined to – 0.5% in January 2021 from 2.8% in December 2020.
In addition, annual non-food inflation declined to 6.4% in January 2021 after recording 6.6% in November and December 2020.
Against this background, monthly core inflation recorded 0.5% in January 2021, compared to 0.7% in January 2020. Hence, annual core inflation declined to 3.6% in January 2021 from 3.8% in December 2020.
Nationwide and rural annual inflation declined to record 4.8% and 5.3% in January 2021 from 6.0% and 6.6% in December 2020, respectively.
Prices of fresh vegetables declined for the second consecutive month by 23.6%, while prices of fresh fruits increased for the second consecutive month by 2.9%.
The drop in fresh vegetable prices was mainly driven by a decline in tomato prices by 53.3%. Together, fresh vegetables and fresh fruits contributed by negative 0.8% to monthly headline inflation.
Prices of poultry increased for the second consecutive month by 8.4%, to contribute by 0.3% to monthly headline inflation.
Prices of fish and seafood increased for the third consecutive month by 0.7%, to contribute by 0.01% to monthly headline inflation.
Prices of other core food items, including eggs, pasta, oil, and fats, increased slightly to contribute by 0.05% to monthly headline inflation.
Prices of retail items declined slightly by 0.08%, to contribute by -0.01% to monthly headline inflation, mainly due to lower prices of clothing.
Prices of services increased slightly by 0.13%, to contribute by 0.05% to monthly headline inflation. This was mainly due to higher prices of outpatient services, hair care services, and rental values of occupied housing.
Prices of regulated items remained broadly unchanged. Monthly core inflation was affected by price changes of the aforementioned core CPI items.
Core food and service items contributed by 0.48% and 0.06% to monthly core inflation, respectively. Meanwhile, retail items contributed by negative 0.02 percentage points to monthly core inflation.
