Egypt Inflation at Highest Since May Fuels Rate SpeculationRinat Gaynullin and Mariam Fam
Egypt’s inflation accelerated last month to the highest level since May 2012 amid a weakening currency, bolstering the case for higher interest rates.
The annual urban rate climbed to 8.2 percent from 6.3 percent in January, according to the state-run Central Agency for Public Mobilization and Statistics today. Prices rose 2.5 percent in February from the previous month.
“The weakening currency is a major driver behind this broad inflationary trend,” Mohamed Abu Basha, an economist at Cairo-based investment bank EFG-Hermes Holding SAE, said by phone. “This increases the possibility of a rate hike.”
The pound has dropped more than 8 percent against the dollar since Dec. 30, according to data compiled by Bloomberg, as the central bank started capping the amount of dollars each lender can buy at currency auctions. The regulator has said the policy seeks to conserve reserves, which have plunged more than 60 percent from their pre-revolt levels to $13.5 billion last month.
High prices were among the reasons that fueled the 2011 uprising that unseated former President Hosni Mubarak.