Egypt April Inflation Accelerates Driven by Rise in Food PricesTarek El-Tablawy
Egypt’s inflation accelerated to 8.1 percent in April, pushed up by rising food prices that are pressuring the government as it seeks to conclude a $4.8 billion International Monetary Fund loan.
Consumer prices rose 1.5 percent in April from the previous month, according to the government’s statistics office. Food and beverage prices climbed 2.7 percent.
“The food was a major factor,” said Mohamed Abu Basha, an economist at investment bank EFG-Hermes SAE in Cairo. “You had food up aggressively. You also had the increase in price of butane canisters,” used for cooking gas. That was ordered by the government as it seeks to reduce its subsidy bill.
Inflation was one the catalysts for Egypt’s 2011 uprising that ousted Hosni Mubarak, and now it’s fueling discontent with his successor, Islamist President Mohamed Mursi. An 11 percent decline in the Egyptian pound since December has contributed to rising costs. The central bank is expected to increase its benchmark interest rate today for the second time this year to curb inflation, according to a Bloomberg survey of economists.
Critics have faulted Mursi for failing to revive an economy that’s been growing at the slowest pace in two decades, and this week he replaced several ministers with key economic portfolios. The government is pinning expectations of a recovery on the long-delayed IMF loan, seen by officials as key to unlocking other foreign funds and helping restore confidence.
Inflation would continue to accelerate in the coming months, particularly ahead of the holy month of Ramadan when prices typically rise sharply, Abu Basha said.