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Egypt’s June Inflation Slows as Food Price Increases Ease

July 10 (Bloomberg) -- Egypt’s inflation rate declined in June as food prices, one of the causes of the unrest that toppled President Hosni Mubarak, rose at a slower pace.

The inflation rate in urban parts of Egypt, the gauge that the central bank monitors, fell to 11.8 percent from 11.9 percent in May, the Central Agency for Public Mobilization and Statistics said on its website today. Food and beverage prices, the biggest component in the consumer price index, rose 19 percent, compared with 19.8 percent a month earlier.

“June is a time of school exams and usually there isn’t much spending,” Alia Mamdouh, an economist at Cairo-based investment bank CI Capital Holding, said before the figures were published. She correctly forecast today’s inflation rate.

Eighteen days of protests in Egypt, sparked by falling living standards and high unemployment as well as a lack of democratic rights, led to the ouster of Mubarak on Feb. 11. Economic growth may slow to 1 percent this year, the International Monetary Fund has said, as the turmoil hurts revenue from tourism and industrial output.

Core inflation, which excludes the prices of fruits and vegetables as well as regulated prices, accelerated to 8.94 percent in June from 8.81 percent in the previous month, the central bank said in a statement on its website.

The central bank on June 9 left its overnight deposit rate unchanged at 8.25 percent, the lowest level in more than four years, and the overnight lending rate at 9.75 percent to support economic growth. The Monetary Policy Committee last raised the benchmark interest rate in September 2008.

To contact the reporter on this story: Mahmoud Kassem in Cairo at mkassem1@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

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