Egypt’s core inflation jumped but urban consumer price inflation eased for the second consecutive month in October, the central bank said, a week after it floated the pound and the government hiked interest rates and fuel prices.
October’s decline in urban consumer price inflation was the second since inflation figures hit a near eight-year high of 15.5 percent in August. Core inflation, which strips out the price of volatile items such as fruit and vegetables, rose from 13.93 percent to 15.72 percent.
Prices have been rising in Egypt as the country embarks on economic reforms and seeks to secure a $12 billion International Monetary Fund loan programme.
Last week, the central bank floated the pound and hiked interest rates by 300 basis points. It also raised fuel prices.
The government’s reform programme, on the basis of which it applied for the IMF loan, also includes the introduction of a value-added tax which came into effect in September.
“The core inflation figures better reflect inflationary pressures emanating from the VAT and higher FX rates,” Reham ElDesoki, senior economist at Arqaam Capital, said in a note.
President Abdel Fattah al-Sisi is under rising pressure to revive the economy and curb inflation that has affected living standards to avoid a public backlash.
The pound depreciated to 16.4 in the first week of trading from the central bank’s peg of 8.8 per U.S. dollar a week before the flotation.
Egypt expects to receive the first $2.75 billion instalment from the IMF as early as next week, bringing fresh dollar inflows into the economy.
