Weaker pound pushes Egyptian inflation higher



REUTERS

Published — Monday 11 February 2013

Last update 11 February 2013 5:31 pm

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CAIRO: Price inflation for Egypt’s urban consumers rose to 6.3 percent in the 12 months to January from an annual 4.7 percent in December, official data showed yesterday, an increase economists attributed to a weakening of the Egyptian pound.
Urban inflation was 1.7 percent in the month of January, the data showed - a monthly rise economists said was the biggest in more than two years as the pound lost about 8 percent of its value against the US dollar.
“We see inflation pressures continuing to build up because we see further weakening of the Egyptian pound,” said Mohamed Abu Basha, an economist at EFG-Hermes.
“Price appreciation was recorded amongst various items in the consumer basket as the impact of the weakening EGP was quickly reflected in prices,” EFG-Hermes added in a research note.
The consumer price index for January was 127.9, it said. The index for December 2011 was 125.7, CAPMAS said last year. In separate inflation data, the central bank said core inflation rose to 5.23 percent in January on a year ago, up from 4.44 percent in December.
Core inflation strips out subsidized goods and volatile items including fruit and vegetables.
The Egyptian economy has taken a hit after two years of political instability, following the ousting of President Hosni Mubarak. Foreign reserves were down to $ 13.6 billion last month from $ 36 billion on the eve of the uprising and political uncertainty has driven a flight into dollars.
“If you want to look at the future, certainly inflation will go up. Luckily, international global food prices are not expected to rise drastically this year,” said Samir Radwan, a former finance minister.

 

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