Annual inflation reaches 12.6 percent; highest in 26 months
CAIRO: The annual inflation rate reached 12.6 percent at the end of last month, up 0.2 percent from January and marking highest rate in 26 months, the Central Agency for Public Statistics and Mobilization (Capmas) reported Sunday.
The February rate is the highest since the implementation of the World Trade Organization’s Gatt Agreement in December 2004 during which inflation was 17.3 percent, according to Capmas.
The rate had flattened in January for the first time in 10 months after the Monetary Policy Committee (MPC) raised interest rates in November and December by 0.5 percent and 0.25 percent, respectively. MPC has since maintained overnight rates at 8.75 percent for deposit and 10.75 for lending.
MPC is scheduled to meet Thursday to decide on another possible hike.
The government, under increasing public pressure to address price increases especially in food and construction materials, has taken several steps to provide relief but quantifiable results have not yet been recorded.
This month, customs exemptions on meat and poultry imports will end unless Prime Minister Ahmed Nazif extends the terms of the decision, now under implementation for six months. In September, Nazif opened the gates for importers to counter the shortages resulting from the Avian Flu Virus and various cattle diseases which hit the country’s livestock in 2006.
In late February, Minister of Trade and Industry Rachid Mohamed Rachid slapped a LE 65 per ton duty on cement exports and a LE 160 per ton duty on steel exports to counter market shortages the ministry identified as the reasons behind skyrocketing prices in both sectors. But, as of the end of last week, the ministry reported prices have maintained their pre-duty levels at LE 345 for cement and LE 3,500 for steel.
On Egypt’s consumer price index, used by Capmas to determine the annual inflation rate, the weight of food items can reach as much as 40 percent. Analysts blamed last year’s entrance of the Avian Flu in February and the government’s July gasoline price hike for inflation rising into double digits toward the end of the year.