Egypt’s headline inflation fell unexpectedly to its lowest rate in more than four years, reaching 8.7% in July, down from 9.4% in July, the Central Agency for Public Mobilization and Statistics (CAPMAS) revealed on Thursday.
However, the headline inflation increased by 1.5% in July on a monthly basis.
On the other hand, the Central Bank of Egypt (CBE) said on Thursday that Egypt’s annual core inflation decreased to 5.9% in July, from 6.4% in June. Core inflation is the change in the costs of goods and services, excluding volatile items from the food and energy sectors.
The announcement defied analyst expectations, as in July the Egyptian authorities decided to go ahead with slashing fuel subsidies, lifting petrol and diesel prices by about 17-30%.
The price of a litre of octane 92 petrol increased to EGP 8, up from EGP 6.75. The price of octane 80 petrol and diesel fuel both increased from EGP 5.50 to EGP 6.75.
The decrease in inflation further raises hopes that the CBE would cut interest rates during the scheduled monetary policy meeting on 22 August.
Egypt’s inflation rates have sky-rocketed since the currency floatation that took place in November 2016, reaching a record high of 35% in July 2017, following the second wave of energy subsidy cuts. They have been gradually decreasing since then.