Egypt inflation quickens for a sixth month on food, devaluation

An Egyptian man is holding bread in the vegetables market in Cairo (file). The highest level in three years, inflation was driven by a 24.8% increase in food and beverage prices, the largest single component of the inflation basket.

Inflation in urban parts of Egypt accelerated for a sixth straight month on the back of soaring global commodities prices and a recent currency devaluation. Consumer prices climbed 13.5% year-on-year in May, versus 13.1% the previous month, the state-run statistics agency CAPMAS said on Thursday. The highest level in three years, it was driven by a 24.8% increase in food and beverage prices, the largest single component of the inflation basket. On a monthly basis, inflation slowed to 1.1% in May from 3.3% the previous month, with the rise in food prices 0.6% versus 7.6% in April. The figures show the growing pressures on consumers in the most populous Arab nation, which is among the world’s biggest importers of wheat and has been especially hard hit as the war in Ukraine sent food and energy prices spiralling. Since March, authorities have devalued the pound and twice hiked Egypt’s interest rate while securing pledges of more than $20bn in deposits and investments from Gulf nations. They’ve also requested talks with the International Monetary Fund on support that may include a loan. Months of quickening price gains are weighing on Egypt’s inflation-adjusted interest rate, which has recently turned negative and undercut the country’s appeal to foreign investors in domestic bonds and bills. The North African nation has seen $20bn in foreign outflows from its local debt market this year as Russia’s invasion of its neighbour tempers global appetite for riskier assets. The central bank’s 200 basis points-hike last month – its biggest in nearly half a decade – showed an effort to regain that allure. The Monetary Policy Committee is due to meet again on June 23, when authorities will judge whether it’s too soon for another rate increase.