The Purchasing Managers Index (PMI) in Egypt dropped to 46.6 degrees in March from 46.9 degrees in February, according to a statement from Standard & Poor’s Global. The performance of the non-oil private sector thus continues to contract.

The private banking company’s economist, David Owen, said that the performance of the index in March expressed a gloomy first quarter in early 2023, explaining that the Egyptian economy was negatively affected by the restrictions on domestic demand in light of the high inflation rates, the weakness of the local currency, and the difficulties of importing. He also pointed out that inflation rates in February were the highest in five and a half years. The PMI is a measure of the prevailing direction of economic trends in manufacturing. The PMI is based on a monthly survey of supply chain managers across 19 industries covering upstream and downstream activity.

According to a recent study on Egypt published by JPMorgan Chase & Co, the nation’s inflation rates in February were higher than anticipated. The study found that, despite the Ministry of Supply’s launch of the Welcome Ramadan initiative to offer lower-cost goods, food prices saw significant increases in February. According to the financial services company, the Central Bank of Egypt’s devaluation of the local currency in January may be to blame for the price increases. Yet, it is challenging to attribute price rises only to this aspect. A new floating of the Egyptian pound is now anticipated. “Food and beverage costs, excluding fruits and vegetables, increased by more than 31.8% in just two months after the last round of flotation,” according to the study. To combat the current inflationary pressures, the Central Bank of Egypt will hike interest rates by 2% at its meeting on March 30.