Egypt Anticipates Rise in March Inflation After Currency Devaluation
In Cairo, Egypt, inflation is anticipated to have risen in March due to several economic adjustments, including a currency devaluation and an interest rate hike at the beginning of the month, followed by an increase in fuel prices later on. These measures were implemented as part of an austerity program linked to a $8 billion financial support package agreed with the International Monetary Fund (IMF) in early March, following over two years of chronic foreign currency shortages.
Analysts predict that annual urban consumer inflation will increase to 36.3% in March from 35.7% in February. The Egyptian pound was allowed by the central bank to depreciate to around 49.5 to the dollar on March 6, compared to the fixed rate of 30.85 pounds maintained for the previous 12 months. Additionally, the central bank raised overnight interest rates by 600 basis points.
James Swanston of Capital Economics commented that inflation in Egypt is expected to accelerate further in the coming months due to the effects of the weaker pound and other administered price hikes. Egypt implemented fuel price increases on March 22, fulfilling a commitment made to the IMF over a year ago to align most domestic prices with international levels.
Core inflation, which excludes fuel and some volatile food items, is projected to rise to 36.1% in March from 35.1% in February, according to a median estimate from three analysts surveyed. Despite a decline in inflation from a record high of 38.0% in September, it unexpectedly surged again in February.
The state statistics agency, CAPMAS, is scheduled to release the official inflation data for March on Monday, providing a comprehensive overview of the economic situation in Egypt amidst ongoing adjustments and reforms.
