Egypt’s annual core inflation slowed to 1.5% in May, down from 2.5% in April 2020, according to the Central Bank of Egypt (CBE).
The consumer price index (CPI) recorded a monthly rate of 0.3% in May 2020, compared to 1% in April 2020, and 1.2% in May 2019. The CBE aims to achieve a target inflation rate of 9% (±3%) in the fourth quarter (4Q) of 2020.
Moreover, the annual urban inflation declined significantly to 4.7% in May, compared to 5.9% in April, the Central Agency for Public Mobilization and Statistics (CAPMAS) revealed on Wednesday.
CAPMAS noted that the CPI totalled 107.7 points in May, registering an increase of 0.1% over April.
The agency attributed the rise to the increase in fruit prices by 4.7%, meat and poultry by 2.0%, cereals and bread by 0.4%, private transportation by 1.6%, garments by 1.3%, and outpatients services by 0.6%.
Meanwhile, vegetable prices declined by 4.7%, fish and seafood by 1.8%, and dairy, cheese, and eggs by 0.2%.
CAPMAS noted that the annual headline inflation declined to 5% in May 2020, compared to 5.9% in April 2020, and 13.2% in May 2019.
Head of Research at Pharos Holding, Radwa El Swaify, said that May’s inflation reading was below expectations, which may have been caused by the drop in prices after Ramadan.
She noted that June inflation may reach 6% on an annual basis, mainly driven by the base year effect. It may slow down in July and August to 5.5%, then 6.5% in September and October, 7% in November and 7.5% in December to close the year at the CBE’s 9% target.
She added that the CBE’s Monetary Policy Committee (MPC) will move to stabilise basic interest rates at the present time, until the end of the year.
On 14 May, the committee had decided to maintain the rates on overnight deposits, lending, and the main operation at 9.25%, 10.25%, and 9.75%, respectively. This was in addition to keeping the credit and discount rate at 9.75%.
In a statement accompanying its decision, the MPC said that the current rates of return are appropriate at the present time. They are also consistent with achieving the target inflation rate of 9% (± 3%) in Q4 of 2020, and price stability in the medium term.