Egypt’s annual urban headline inflation declined to 5.4% in December from 5.7% in November 2020, the Central Bank of Egypt (CBE) revealed. The decline comes as the monthly inflation recorded -0.4% in December 2020, compared to -0.2% in December 2019.
The annual urban headline inflation registered an average of 5.2% during the fourth quarter (Q4) of 2020 against a target lower band of 6%, as was announced in 2018.
The subsequent inflation target has been set at an average of 7% (±2%) during Q4 of 2022, as was announced in December 2020.
The monthly inflation in December 2020 was mainly driven by lower prices of tomatoes, which contributed by negative 0.36% to monthly headline inflation. Such a decline reflected its normal seasonal pattern, as well as a partial reversal of the transitory shock witnessed during November 2020, as expected.
Meanwhile, fresh fruit prices increased after declining for five consecutive months. Prices of remaining CPI basket items contributed only marginally to monthly headline inflation, as slightly higher prices of core food items and services were offset by lower prices of retail items.
Accordingly, annual food inflation declined to 2.8% in December 2020 from 3.6% in November 2020, mainly due to the lower annual contribution of fresh vegetables. Meanwhile, annual non-food inflation remained stable at 6.6% in December 2020, after declining in November 2020 from 6.9% in October 2020.
Against this background, monthly core inflation continued to record zero% in December 2020 for the second consecutive month, compared to 0.2% in December 2019. Hence, annual core inflation declined to 3.8% in December 2020 from 4.0% in November 2020.
Nationwide and rural annual inflation declined to record 6.0% and 6.6% in December 2020, from 6.3% and 6.9% in November 2020, respectively.
Fresh vegetable prices declined by 11.6% following three consecutive months of increases, while fresh fruits prices increased by 4.1%, following five consecutive months of decreases. Together, fresh vegetables and fresh fruits contributed by -0.4% to monthly headline inflation.
Prices of poultry increased by 0.3%, contributing 0.01% to the monthly inflation.
Prices of fish and seafood increased for the second consecutive month by 0.3%, to contribute by 0.01 percentage points to monthly headline inflation.
Prices of other core food items, including pasta, oil, and fats, increased slightly to contribute by 0.02% to monthly headline inflation.
Retail prices declined by 0.4%, to contribute by negative 0.06% to monthly headline inflation. This was mainly due to seasonally lower prices of clothing and slightly lower prices of personal care products.
Services prices increased slightly by 0.1%, to contribute by 0.03% to monthly headline inflation. This was mainly due to slightly higher rental values of occupied housing and air transportation.
At the same time, the prices of regulated items remained broadly unchanged. Monthly core inflation was affected by price changes of the aforementioned core CPI items.
Core food items and services items contributed by 0.05 and 0.04% to monthly core inflation, respectively, which were offset by negative contribution of retail items by 0.09% to monthly core inflation.