The Central Bank of Egypt (CBE) released a report on the inflation rates in October 2023, showing a decrease in both headline and core inflation for the fourth consecutive month. The report attributed the slowdown to lower prices of food and non-food items, as well as the postponement of education prices to February 2024.
According to the report, the annual headline urban inflation, which measures the change in the cost of living for urban consumers, dropped to 35.8% in October 2023, from 38% in September 2023. This was mainly due to lower prices of non-food items, such as services and retail items, as well as food items, especially fresh fruits and vegetables.
The report also stated that the annual core inflation, which excludes the prices of volatile items such as food and energy, decreased to 38.1% in October 2023, from 39.7% in September 2023. This was in line with the monthly core inflation, which recorded 1.8% in October 2023, compared to 3% in the same month last year.
The CBE highlighted that the annual inflation rates in October 2023 were affected by a favorable base effect, which means that the inflation rates in the same month last year were higher than usual. This was because of the reflection of education prices in the consumer price index (CPI) in October 2020, as well as supply disruptions that affected food items. However, this year, the Central Agency for Public Mobilization and Statistics (CAPMAS) announced that education prices would be reflected in February 2024 instead of October 2023, which amplified the impact of the favorable base effect on the annual rates.
The report also provided a breakdown of the monthly inflation rates for different categories of items. The main findings were:
- Prices of fresh fruits and vegetables declined by 6.2% and 3.4%, respectively, contributing to a negative 0.31% to the monthly headline inflation. This was due to the dissipation of the weather-related inflationary shock that occurred in the previous months.
- Prices of poultry and eggs increased by 11% and 8.9%, respectively, contributing 0.78% to the monthly headline inflation. This was driven by higher demand and lower supply of these items.
- Prices of dairy products, market sugar, and other core food items increased by varying rates, contributing 0.2% to the monthly headline inflation. This was mainly due to higher production costs and consumer preferences.
- Prices of fish and seafood, market rice, and edible oils declined by varying rates, contributing to a negative 0.06% to the monthly headline inflation. This was mainly due to lower demand and higher supply of these items.
- Prices of services increased by 0.8%, contributing 0.22% to the monthly headline inflation. This was primarily driven by higher expenditure on restaurants and cafes and higher rental values.
- Prices of retail items increased by 1.1%, contributing 0.14% to the monthly headline inflation. This was mainly attributed to higher prices of household cleaning products and personal care products.
- Prices of regulated items remained broadly stable, with no significant contribution to the monthly headline inflation.
The report also showed that the annual inflation rates in rural areas and nationwide declined to 41.1% and 38.5%, respectively, in October 2023, from 42.6% and 40.3%, in September 2023. This was consistent with the trend observed in urban areas.