Egypt’s annual urban inflation increased to 10.5% in March, from 8.8% in February 2022, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).
According to the agency, the consumer price index for the whole country reached 124.4 points in March, registering an increase of 2.4% over February 2022.
CAPMAS attributed this increase to the rise in prices of cereals and bread group by 11%; the meat and poultry group by 7%; the fish and seafood group by 6.2%; the dairy, cheese, and eggs group by 5%; the fruit group by 4.2%; the oils and fats group by 2.3%; the tobacco group by 2%; tourist trips by 32.7%; and the ready-made meals group by 6.1%. Meanwhile, prices of vegetables decreased by 2.9%.
The agency announced that the country’s annual inflation soared to 12.1% in March 2022, compared to 10% in February 2022, and 4.8% in March 2021.
Moreover, the monthly core inflation, computed by the Central Bank of Egypt (CBE), recorded 3.1% in March 2022, up from 1.2% in February 2022, and 0.5% in March 2021. Accordingly, the annual core inflation increased to 10.1% in March 2022, compared to 7.2% in February 2022.
The Monetary Policy Committee decided, at its extraordinary meeting, held on 21 March 2022, to raise the basic interest rates with the Central Bank of Egypt (CBE) by 1%, to reach 9.25% for deposit, 10.25% for lending, and 9.75% for the credit and discount rates, and the price of the main operation.
The committee said that global inflationary pressures began to re-emerge, after signs of recovery of the global economy from the turmoil caused by the novel Coronavirus pandemic, due to the developments of the Russian-Ukrainian conflict, as risks related to the global economy increased as a result of this conflict, and on top of those pressures comes the noticeable rise in global commodity prices, supply chain disruptions and high freight costs, in addition to the fluctuations of financial markets in emerging countries, which led to domestic inflationary pressures and increased pressure on the external balance.
The committee pointed out that in the interest of maintaining macroeconomic stability and its gains, it believes in the importance of exchange rate flexibility to serve as a tool to absorb shocks and maintain Egypt’s competitiveness.
It added that, in light of these developments, and in view of the central bank’s target inflation rate, which is 7% (±2%) on average during the fourth quarter of 2022, it decided to raise the basic interest rates of the central bank by 100 basis points.
The Monetary Policy Committee stressed that achieving low and stable inflation rates in the medium term is a prerequisite for supporting the purchasing power of the Egyptian citizen, and achieving high and sustainable growth rates, pointing out that it will closely follow all economic developments and will not hesitate to use all its monetary tools to achieve the goal of price stability on the medium range.