Egypt's inflation rises to 15.4% amid price hikes

2018-10-10 21:29


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Egypt said on Wednesday that inflation jumped to 15.4% in September, a rise of more than two percentage points over the previous month and the highest level since eight months ago.

Data released by the state statistics bureau showed an increase in food and beverages prices, the single largest component in the basket of goods and services used to gauge inflation.

It showed that food prices, which rose by a monthly rate of 4.8%, were the main reason for the jump. Vegetable prices increased by a monthly rate of 17.2% and fruits prices rose by 7.4% in September, according to the data.

September figures put the annual figure near the ceiling of the central bank of Egypt's target range of 13%, plus or minus 3 percentage points.

The inflation rate was 12.8% in August.

Inflation peaked last year, hovering around 30% after the government cut fuel and electricity subsidies. It reached 32.9% in September 2017.

The measures were part of economic reforms that have caused the prices of basic goods to spike, hitting poor and middle-class Egyptians especially hard.

Meanwhile, an international credit rating agency on Wednesday raised Egypt's banking system outlook to positive from stable, citing an improving operational environment following the implementation of an ambitious economic reform plan backed by the International Monetary Fund.

Moody's said the positive outlook reflects the strong links between the banks' and the Government of Egypt's improving credit profile.

Moody's has expected real GDP growth to reach 5.5% in 2019 from 4.2% in 2017, while ongoing economic and fiscal reforms will slowly nudge GDP higher.

"Increased domestic private sector investment, large infrastructure projects, as well as higher exports will drive economic growth and credit demand," said Moody's Assistant Vice President Melina Skouridou.

Egypt embarked on a reform program shortly after President Abdel-Fattah al-Sisi took office in 2014. The government has slashed subsidies, imposed a value-added tax and allowed a major currency devaluation in order to qualify for a $12bn bailout loan from the International Monetary Fund. Egypt secured the loan in 2016.

The measures aimed at rebuilding the struggling economy after years of political turmoil since the 2011 uprising that toppled longtime autocrat Hosni Mubarak and years of political instability that ensued.

President al-Sisi, who led the 2013 military overthrow of an elected but divisive Islamist president, Mohammed Morsi, has urged Egyptians to be patient as the reforms take effect.

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