Egypt headline inflation sees surprise dive to 9.4% in June

Vegetable prices increased by 17.6% year-on-year in June. (File/AFP)
Updated 10 July 2019
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Egypt headline inflation sees surprise dive to 9.4% in June

  • Analysts said the deceleration is affected in part by lower vegetable prices
  • Fuel prices increased by 16-30% as part of IMF-backed economic reform

CAIRO: Egypt’s annual urban consumer price inflation fell sharply to 9.4% in June from 14.1% in May, official statistics agency CAPMAS said on Wednesday, a significantly bigger drop than analysts had expected.
Analysts said the deceleration was partly due to last year’s high base effect and lower vegetable prices, which are often a key contributor to high inflation.
“That’s a bigger than expected drop,” said Allen Sandeep, head of research at Naeem Brokerage. “Good news for the markets, as this could raise hopes for a rate cut tomorrow.”
The Central Bank of Egypt’s monetary policy committee will meet on Thursday. It held rates steady at its last two meetings, in May and March, after a surprise cut in February.
Of 15 contributors to a Reuters poll, Naeem was the only one to predict a cut on Thursday.
Urban inflation fell month-on-month in June by 0.8% after rising by 1.1% in May, the statistics showed.
“It’s due, in part, to last year’s high rates and also to some falling vegetable prices,” said Angus Blair, chairman of business and economic forecasting think-tank Signet.
Vegetable prices rose 17.6% year-on-year in June, but fell 10% compared to May, CAPMAS said.
Egypt raised fuel prices last week by between 16% and 30% as part of an IMF-backed economic reform program that saw inflation rise to a high of 33% in 2017.
While economists had predicted a softer deceleration in inflation in June, most continued to predict the bank would hold rates until the fuel price hikes’ impact is tested.


BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 19 July 2019
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BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.