Egyptian Inflation Accelerates With Jump in Food Prices That Sparked Riots
Egyptian inflation accelerated in March on rising food prices, one of the causes of the unrest that toppled President Hosni Mubarak.
The inflation rate in urban parts of Egypt, the gauge that the central bank monitors, rose to 11.5 percent from 10.7 percent in February, the Central Agency for Public Mobilization and Statistics said on its website today. Prices increased 1.4 percent on a monthly basis, it said. Beltone Financial and CI Capital, two Cairo-based investment banks, had forecast inflation at 10.8 percent.
“With inflation remaining to be food-prices led, we maintain our view that Central Bank of Egypt interest rates are likely to remain unchanged,” Beltone said in an e-mailed report today. The central bank will meet on April 28 to review interest rates.
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. The economy is still reeling from the impact of the uprising. Growth may slow this fiscal year to between 2.5 and 3 percent from 5.1 percent in the previous year, Finance Minister Samir Radwan said.
The central bank on March 10 left its overnight deposit rate unchanged at a four-year low of 8.25 percent and kept the overnight lending rate at 9.75 percent to support economic growth. The Monetary Policy Committee last raised interest rates in September 2008.
Core inflation, which excludes the prices of fruits and vegetables as well as regulated prices, eased to an annual rate of 8.54 percent in March from 9.51 percent in the previous month, the central bank said in a statement on its website.
As protests continue, tourists have stayed away and factory output has been hit by strikes. Egypt’s net international reserves fell for a third month in March to $30.1 billion, the lowest level in more than three years, from $33.3 billion in the previous month, after the central bank bought pounds to prop up the currency.
The prices of food and vegetables, the biggest component in the consumer price index, rose 20.5 percent this year, the statistics agency said today. On a monthly basis, they increased 3.3 percent, it said.
Juhayna Food Industries (JUFO), Egypt’s biggest publicly traded producer of packaged milk rose 0.9 percent, the most since April 3, to 5.41 Egyptian pounds at the 2:30 p.m. close in Cairo. The benchmark EGX 30 Index fell 1.4 percent.
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