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Egyptian inflation likely to accelerate further in January

Egypt Reuters/Shokry Hussien
Inflation has risen sharply over the last year after a series of currency devaluations starting in March 2022

Egypt’s headline inflation is expected to accelerate further in January after surging to its highest in five years in December, a Reuters poll showed on Tuesday, as prices continued to rise after a series of devaluations over the past 10 months.

The median forecast of 14 analysts showed annual inflation at 23.75 percent in January, up from 21.3 percent in December, which was the highest since December 2017.

“Our monitoring of local prices shows prices continued to rise steadily in January for most basic commodities, including rice, edible oils, sugar, meat and poultry,” said Goldman Sachs, which forecast inflation coming in at 23.8 percent.

A possible increase of up to 10 percent in fuel prices at a quarterly meeting of the government’s fuel pricing committee could reduce the pace of disinflation, it said in a note.

The central bank has allowed the Egyptian pound to depreciate by nearly 50 percent since March, with particularly big drops in March, late October and early January.

Five analysts also forecast that core inflation would climb to 26.6 percent.

A high increase in inflation could put pressure on the central bank’s Monetary Policy Committee to raise interest rates when it next meets on March 30.

At its last meeting on February 2, the MPC left rates unchanged, saying its hikes of 800 basis points over the last year should help to tame inflation.

The state statistics agency CAPMAS is scheduled to release December inflation data on Thursday morning.