CBE reveals reasons for inflation increase in February 2022

Hossam Mounir
3 Min Read

In February 2023, the annual headline urban inflation accelerated to record 31.9%, up from 25.8% in January 2023. The strong dynamics reflect the combined effect of supply shocks caused by supply chain disruptions, mainly affecting poultry, the exchange rate fluctuations since March 2022 and the seasonal impact of Ramadan; from pilgrimage trips to food prices.

Annual headline inflation in February 2023 continued to be primarily driven by higher food prices and supported by higher prices of non-food items. Annual food and non-food inflation continued their upward trend to record 61.8% and 18.1%, respectively.

Monthly headline urban inflation recorded 6.5% in February 2023 compared to 1.6% in February 2022. This was mainly driven by broad-based increases of core food items’ contributions (4.7%).

Non-food items also contributed to monthly headline urban inflation, which were basically driven by the higher contributions of both services and retail items.

Driven by higher broad-based annual contributions, annual core inflation continued its upward trend, to record 40.3% in February 2023 from 31.2% in January 2023. Monthly core inflation climbed to 8.1% in February 2023, compared to 1.2% in February 2022.

Nationwide annual inflation increased to 32.9% in February 2023 from 26.5% in January 2023. In addition, rural annual inflation increased to record 33.8% in February 2023 from 27.2% in January 2023.

Prices of fresh vegetables and fresh fruits increased by 5.4% and 16.5%, respectively. Together, they contributed by 0.45% to monthly headline inflation.

Prices of poultry, red meat and fish & seafood increased by 35.9  %, 19.9%, and 19.1%, respectively.

 Accordingly, the contribution of poultry, red meat, fish and seafood to monthly headline inflation was 1.98%, 0.87%, and 0.46%, correspondingly.

Prices of eggs increased by 24.2%, to contribute by 0.38% to monthly headline inflation.

Prices of dairy products increased by 6.2% to contribute by 0.27% to monthly headline inflation.

Prices of market rice increased by 17.5% to contribute by 0.22% to monthly headline inflation.

Prices of other core food items including pasta, fats, and coffee, among others, increased to contribute by 0.56% to monthly headline inflation.

Prices of services increased by 2.9%, to contribute by 0.92% to monthly headline inflation. This mainly reflected the seasonal impact on pilgrimage trips, expenditures on restaurants and cafes, and rental values.

Prices of retail items increased by 2.5%, to contribute by 0.35% to monthly headline inflation. This was mainly due to an increase in the prices of personal care products, clothing and footwear, household appliances and cleaning products, and medical products and appliances.

Prices of regulated items remained broadly stable.

Monthly core inflation was affected by price changes of the aforementioned core CPI items. Core food items, services and retail items contributed by 6.41%, 1.24% and 0.47% to monthly core inflation, respectively.

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