Inflation in Egypt rises by 21.3%

Egypt’s urban inflation accelerated at its fastest pace in five years as several rounds of currency devaluation filtered through to consumers.

Prices increased an annual 21.3% in December from 18.7% the previous month, the state-run statistics agency CAPMAS said.

The upswing was fueled by a 37.2% increase in food and beverage costs, the largest single component of the inflation basket.

Egypt allowed its currency to weaken twice in 2022, driving up the cost of imports that have already come under pressure from trade restrictions and the economic fallout of Russia’s invasion of Ukraine.

Egypt is grappling with its worst foreign-currency crunch in years and has recently seen the emergence of a black market for dollars. It secured a $3 billion loan from the International Monetary Fund and sought help from its wealthy Gulf Arab allies.

Core inflation, the gauge used by the central bank that strips out volatile items, accelerated to 24.4% in December from 21.5% in November.

This week, the government said it would curb state spending, including through halting costly new infrastructure projects. The central bank announced in December it was targeting inflation at an average of 7%, plus or minus 2 percentage points by the fourth quarter of 2024.

Bloomberg/Hauwa Abu