Egypt Watch

CBE: Inflation in Egypt hits 5.9%

Data from the Central Bank of Egypt showed a rise in core inflation by 0.2 per cent during December 2021, compared to a monthly rate of 0.5 per cent in November of the same year.

Inflation is the general increase in most price values, which in turn leads to a decrease in the purchasing value of the currency. It results in a gap in the market between prices and the costs of factors of production. The inflation rate is calculated on a monthly and yearly basis.

The annual inflation rate is calculated by measuring price levels in a particular month compared to the corresponding month of the previous year, while the monthly inflation rate is calculated by comparing price levels in a particular month with the previous month, by measuring the rate of price increases in sections of goods and services that have a relative weight. On Monday, the Central Agency for Public Mobilisation and Statistics announced that inflation recorded a monthly rate of negative 0.4 per cent, compared to 0.1 per cent in November.

The difference between the core inflation index, which is announced by the Central Bank, and the general inflation index, which is announced by the General Agency for Mobilisation and Statistics, lies in the exclusion of some commodities that are affected by temporary supply shocks and sharp price fluctuations, such as fruits and vegetables, in addition to the commodities whose prices are fixed. Inflation began rising in 2017 after the government launched what it considered economic reforms as part of a loan programme with the International Monetary Fund, but it has slowed significantly in the past four years.

Annual inflation in 2020 slowed to its lowest level in 15 years, but has increased every month since April, when it reached 4.1 per cent. It had reached 5.7 per cent in November of the same year. The annual and monthly inflation rate rose in September 2021 to eight per cent and 1.6 per cent, respectively, which represented the highest annual inflation rate in at least a year.

The reports attributed the reasons for the acceleration of inflation growth on an annual basis at that time to the increase in the prices of electricity, gas and other fuel materials by 8.9 per cent, food and beverages by 5.4 per cent, transportation services by 7.8 per cent, regular tourist trips by 6.9 per cent, dairy by 2.2 per cent, cigarettes by 1.7 per cent, and education by 29.7 per cent.