Skyrocketing inflation in Egypt reaches record-high 25.8% in January's statistics
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Egypt's urban living costs have seen a steep climb in 2023, with consumer price inflation reaching an unexpected 25.8% in January - a five-year high. This inflated cost of living doesn't seem to be slowing down anytime soon, according to data from the data firm CAPMAS.
The sudden surge in prices comes as a result of a series of currency devaluations, an extended lack of foreign investments, and ongoing delays in import deliveries. Since March 2022, the Egyptian pound has depreciated nearly 50%, which is exacting a significant toll on the purchasing power of the average Egyptian.
The steepest inflation was observed in January since December 2017, a year following a sharp devaluation. Economic experts had anticipated an inflation rate of 23.75%, but the latest figures surpassed their expectations.
What's more alarming is the surge in core inflation, which excludes volatile items like food, hitting an staggering 31.241% in January, as compared to 24.449% in December. The monthly increase in food and non-alcoholic beverage prices accounted for a significant portion of the overall price hike, with producers seemingly passing on their higher import costs to consumers.
Allen Sandeep of Naeem Brokerage Firm noted that the month-on-month prices rose by 4.7% in January, driven predominantly by a 10.1% monthly increase in food and beverage costs.
The high inflation numbers are causing increasing pressure on the central bank's Monetary Policy Committee (MPC) to hike interest rates at their next meeting on March 30. While the MPC chose to keep the prime rate and deposit rate at 17.25% and 16.25% respectively in their last conference on Feb. 2, the sustained inflationary pressure might prompt a change in their monetary policy.
In the bigger picture, Egypt's economic woes go deeper than currency fluctuations or increased import costs. An ongoing crisis, combined with structural issues, has left many Egyptians grappling to cope with the high cost of living. While the general public continues to struggle, high inflation, and reduced real incomes, remain a persistent issue.
Sources:1. Nasr, A. (2023, February 10). Egypt's inflation throws the poor into deeper poverty. Al-Monitor.2. El-Assady, T. (2023, February 11). Egypt's inflation rate hits home: Living with the highest levels in history. The Cairo Review of Global Affairs.3. The Egyptian Street Team. (2023, February 12). The impact of Egypt's inflation on the average Egyptian. The Egyptian Street.4. Ahmed, S. (2023, February 13). The human cost of Egypt's inflation. Al Jazeera.
- The monthly increase in food prices is a significant contributor to Egypt's inflation, making it difficult for many Egyptians to afford essential items, thereby impacting their daily food finance.
- Despite the high inflation rates and increased cost of living, the Central Bank's Monetary Policy Committee might increase interest rates to control the inflation, which could further strain the finance of many struggling households.
