Egypt Inflation eased in August despite price increases By Reuters

CAIRO (Reuters) – Egypt’s inflation is expected to have fallen for a sixth month in August, helped by a favorable base effect, but some analysts said it was likely to have risen month-on-month after a series of increases government-led pricing.

Egypt in March signed an $8 billion financial support package with the International Monetary Fund that helps it rein in inflationary monetary policy – but requires it to raise many domestic prices.

As a result, the government raised the price of many subsidized products to fight a budget deficit that reached 505 billion Egyptian pounds ($10.3 billion) in the fiscal year that ended June 30.

Annual urban consumer inflation fell to an average of 25.1 percent in August from 25.7 percent in July, according to forecasts by 19 analysts.

“We expect urban inflation to ease to 24.9% year-on-year for August, with a favorable base effect. However, we anticipate a 1.0% month-on-month increase following recent increases in energy and transport costs in early August,” said Heba Mounir of HC Securities.

Naeem Holding, which had forecast headline annual inflation of 24.8%, predicted a 1.24% month-on-month rise in July.

This was due to increases in summer product prices, fuel increases of 10-15% near the end of July, a 25-33% increase in metro fares in early August and a 21-31% increase in electricity tariffs , partly in August. .

Inflation eased from September’s record high of 38.0%, turning Egypt’s benchmark real interest rates positive in July for the first time since January 2022.

An average of five analysts forecast core inflation, which excludes volatile items such as fuel and some food, to fall to 23.9 percent from 24.4 percent in July.

State statistics agency CAPMAS is due to publish August inflation data on Tuesday.