Egypt’s August inflation rate falls to 7.5%, lowest in years

Egypt's Finance Minister Mohamed Maait gestures during a news conference in Cairo, Egypt July 17, 2019. (Reuters)
Updated 10 September 2019
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Egypt’s August inflation rate falls to 7.5%, lowest in years

  • The inflation rate was lower than some analysts expected
  • The July pace was 8.7%

CAIRO: Egypt’s annual urban consumer-price inflation rate declined to 7.5% in August, the lowest rate in years, and analysts said it opened the way for further rate cuts by the central bank.
The inflation rate, reported by the official statistics agency CAMPAS on Tuesday, was lower than some analysts expected. The July pace was 8.7%.
Egypt is approaching the end of an economic reform program backed by the International Monetary Fund that during 2017 saw inflation rise to a high of 33%.
Core inflation, which strips out volatile items such as food, also declined, to 4.9% in August from 5.9% in July, the central bank said on Tuesday.
According to Refinitiv data, August’s headline rate was the lowest in more than six years.
“[August’s rate] falls well below the 9% target the Egyptian Central Bank had set itself for the end of 2020. This paves the way for another large rate cut on Sept. 26,” said Jaap Meijer, head of equity research at Arqaam Capital.
The central bank cut rates by 150 basis points at its last monetary policy committee meeting, on Aug. 22, encouraged by the declining inflation rate.
Radwa El-Swaify, head of research at Pharos Securities Brokerage, said the August number is “positive and gives positive signs for interest rates in the next meeting. We expect a cut of 1%-1.5%.”
Egypt raised domestic fuel prices in July 2019 as part of the terms of the IMF agreement, and the increase had been expected to push up prices for transport, food products and other goods.
Nadene Johnson, an economist at NKC African Economics, said the August inflation number resulted partly from a favorable base effect from a year earlier. In August 2018, Egypt’s headline inflation rate was 14.2%, after subsidies were cut.
She also said a strengthening currency as well as low global oil prices “would support further easing of price pressures.”
“Nonetheless, with energy reforms complete, and with global oil prices on the bearish side, we expect inflation to ease gradually in the coming year, albeit slightly higher toward the end of this year,” Johnson said.


Lebanon’s Jammal Trust Bank forced to close by US sanctions

Updated 19 September 2019

Lebanon’s Jammal Trust Bank forced to close by US sanctions

  • Jammal Trust Bank is accused of helping to fund the Hezbollah movement in Lebanon
  • The bank has 25 branches in Lebanon and representative offices in Nigeria, the Ivory Coast and Britain

BEIRUT: Lebanon’s Jammal Trust Bank has been forced to wind itself down after being hit last month by US sanctions for allegedly helping to fund the Iran-backed Hezbollah movement, the bank said on Thursday.
The central bank said the value of the bank’s assets, and its share of the national deposit guarantee body, were “in principle enough to pay all deposits and commitments.”
Jammal Trust Bank denied the US allegations in August after the bank and its subsidiaries were hit with sanctions, accused of helping to fund the Hezbollah movement in Lebanon.
“Despite its sound financial situation ... and its full compliance with banking regulations, the (bank) was forced to take the decision to liquidate itself in full coordination with the central bank,” Jammal Trust said in a statement.
The bank has 25 branches in Lebanon and representative offices in Nigeria, the Ivory Coast and Britain, its website says.
It is a relatively small lender, with net assets of 1,600 billion Lebanese pounds ($1 billion) at the end of 2017, according to the annual report on the latest year for which data is available.
Washington has sought to choke off Hezbollah’s funding worldwide, with sanctions among a slew of steps against Tehran since US President Donald Trump withdrew last year from a 2015 international nuclear deal with Iran.