The Central Agency for Public Mobilisation and Statistics (CAPMAS) said on Tuesday that annual urban headline inflation fell to 5.3% in February 2020, compared to 7.2% in January.
The agency added that the inflation rate on a monthly basis recorded 0% compared to 0.7%.
While, Monthly core CPI inflation – which excludes the price of energy and volatile items – computed by the Central Bank of Egypt, recorded 0.2% in February 2020 compared to 1% in the same month in 2019, and 0.7% in January 2020.
Accordingly, the annual core inflation rate recorded 1.9% in February 2020, compared to 2.7% in January 2020.
According to CAPMAS, the consumer price index recorded 105.2 points in February, thus maintaining the general level of prices from January.
It explained that this came as a result of the decrease in the vegetable group by 5.4%, other food products by 0.9%, fruits by 0.3%, fish and seafood by 0.2%, and clothing and footwear by 1.3%.
This comes despite the increase in meat and poultry group prices by 1.9%, dairy, cheese and eggs by 0.9%, cereals and bread by 0.4%, and restaurants and hotels by 0.7%.
The agency noted that the annual inflation rate of the country totaled 4.9% for February, compared to 6.8% in January, and 13.9% in February 2019.
The drop in inflation makes CBE’s expected decision regarding interest rates a mystery. The Monetary Policy Committee (MPC) will meet on 2 April to make a decision.
According to Mohamed Abdel-Aal, a banking expert and a member of the Board of Directors of the Suez Canal Bank, reducing the interest on the pound has become an inevitable requirement. It is best to reduce it decisively to drive growth and resist the expected recession due to the Coronavirus crisis. He called for an immediate reduction in energy prices for factories, even temporarily, and lowering the prices of oil and its derivatives, without waiting for the pricing committee to be held in April.
Abdel-Aal also believes it is necessary to develop the recent initiatives issued by CBE and direct and limit them to the sectors that were damaged or will be negatively affected the most by the current crisis. He also called for giving special attention and support to sectors of providing goods and services to people such as food and transportation activities of all kinds, in addition to the sector of tourism. He stressed that supporting these activities will help create a derivative demand that encourages producers to continue production.
The MPC decided in its meeting that was held on 20 February to keep the rates of return on deposit and lending for one night and the price of the main process at the level of 12.25%, 13.25%, and 12.75%, respectively, as well as keep the credit and discount rate at the level of 12.75%.