Egypt Braces for March Inflation Uptick: Poll Indicates Upward Trend
In Egypt, inflation is anticipated to have risen in March, driven by adjustments in response to a currency devaluation, an interest rate hike, and a fuel price increase earlier in the month. A poll conducted by Reuters revealed expectations of an increase in annual urban consumer inflation by 0.6 percent to reach 36.3 percent, as projected by a median forecast from 12 analysts. Despite a decline in inflation from the record high of 38.0 percent in September, it unexpectedly surged again in February.
These developments are aligned with the government’s austerity measures, which are part of its agreement with the International Monetary Fund (IMF). Last month, Egypt secured an expanded $8 billion financial support package from the IMF after enduring over two years of chronic foreign currency shortages. As part of this arrangement, the central bank announced the liberalization of the Egyptian pound, resulting in a significant depreciation to about 49.5 pounds against the dollar from 30.85 pounds. Additionally, the central bank raised its overnight interest rates by 600 basis points in an effort to stabilize the economy.
The upcoming release of March inflation data by the state statistics agency, CAPMAS, is highly anticipated. Egypt’s economy has faced considerable challenges, including years of government austerity, the impact of the Covid-19 pandemic, repercussions from the conflict in Ukraine, and more recently, the conflict in Gaza. These factors collectively contribute to the economic landscape and dynamics of inflation within the country.
