Egypt’s annual urban consumer inflation registered 8.3% in July 2015, compared to 11.5% in June 2015, according to the Central Agency for Public Mobilization and Statistics’ (CAPMAS) calculations.
When comparing annual inflation in July 2015 to that of the same period in 2014, inflation rates were much higher the previous year, according to Mohamed Farid, Chairman of Dcode Economic and Financial Consulting.
According to previous CAPMAS statistics, annual urban consumer inflation registered 11.04% in July 2014.
The high rate was mainly attributed to the fact that Egypt reduced petroleum subsidies in the fiscal year (FY) 2014/2015 budget to EGP100bn, compared to EGP 134bn for FY 2013/2014.
President Abdel Fattah Al-Sisi’s government raised automotive petroleum product prices on 4 June, including fuel, diesel and natural gas, as a means to finance the growing budget deficit.
Regarding whether inflation will decline in the upcoming period, Farid indicated that inflation is expected to increase. This is because the government plans to reduce subsidies on a number of services in the coming period, which will lead to a significant rise in prices.
Dcode anticipates that annual average inflation for the FY 2015/2016 will be 12%, according to Farid, whilst the Egyptian government expects the figure to reach between 10% and 11%.
Furthermore, Farid expects inflation indicators to rise, while consumers’ purchasing power will be reduced with the enforcement of the value-added tax (VAT) law, set to be approved by the government before the end of this year.
In spite of the year-on-year decline, the Consumer Price Index (CPI) increased by 0.6% in July 2015 compared to the preceding month, CAPMAS said.
The rise is mainly attributed to seasonal prices and the price increase in services controlled by the state, such as electricity, water and gas prices, which increased by 3.2%, Farid added.
This season, the prices of fish and other seafood have significantly increased by 3.6%, due to the summer season when there is high demand on these food items, he elaborated.
The prices of other products also witnessed an increase, albeit minimal, compared to the above-mentioned prices.