The annual inflation rate in Egypt stabilized at 30.9% in June, unchanged from May, according to the Central Agency for Public Mobilization and Statistics (CAMPAS) on Monday.
The annual inflation rate fell in May to 30.9%, down from 32.9% in April—its record high in decades. This was the first drop in the inflation rate since the pound was floated in November 2016.
Minister of Finance Amr El-Garhy said that inflation is a top priority now. “Inflation is the first enemy of investment,” he stressed.
El-Garhy told Daily News Egypt that the lower monthly inflation rate is a positive indicator that will accelerate future interest rate cuts.
He noted that the economic management, represented by the leaders of monetary and financial policies, is able to reduce inflation to rates below 16% in the last quarter of 2018.
He refuted rumors spread that a 1% increase in interest rates affects the state treasury with EGP 30bn, adding that the external debt is not fully funded through treasury bills and the interest rate hike is temporary.
But annual inflation in cities rose slightly in June to 29.8%, against 29.7% in May, while it decreased in the countryside from 32.2% to 32.1%.
Monthly inflation across Egypt has continued to decline for the fifth month in a row in June to register at 0.8%, down from 1.6% in May.
The increase in fuel prices did not show on inflation rate for June due to the methodology used by CAPMAS in the collection of data. CAPMAS monitors the prices of food, industries, and services per month during the period from day 1 to 28 of each month. The government announced raising fuel prices on 29 June.
Major General Abu Bakr Al-Gendy, the head of CAPMAS, said on Monday that the fuel price hikes were announced at the end of June, which would not impact the inflation in June, but rather in July.
About two weeks ago, the government raised fuel prices, including gasoline, diesel, fuel, and natural gas. The Ministry of Electricity announced last week the increase in tariff prices of all segments of consumption.
Economic expert Hany Genena said that the stability of the annual inflation rate is a positive indicator despite the recent reform carried out by the government. He expected the rate, on the annual basis, to climb again in the coming months on the back of raising fuel and electricity prices, before coming down again after November.
Meanwhile, investment banks expected the annual inflation to reach 35-36% in the first quarter of fiscal year 2017/2018 after raising energy prices and increasing the value-added tax to 14%, up from 13% in July.
The food and beverage section in June registered inflation of 40.8% compared to June 2016. The prices of citrus increased by 78.9%, flour by 76.4%, preserved and processed meat by 69%, dry vegetables by 64.7%, sugar by 59.3%, tomatoes by 59.1%, and edible oils by 58.2%.
Prices of onions also rose by 56.6%, fresh and frozen fish by 55.2%, tea by 55%, cheese by 54.9%, butter by 51.8%, fresh and frozen meat by 51.1%, jam by 50.6%, and salted and smoked fish by 50.3%.
The prices of glassware and tableware showed the most significant rises outside the food and drink section, with an 82.5% increase, followed by organized tourism trips (Hajj and Umrah) by 74.3%, and then gold by 67.6%.