Inflation in Egypt hit hard by Russia

Inflation in Egypt is going to be a “long-stretched affair”, according to a Mena market researcher in a video interview with AGBI. 

Egypt’s annual headline inflation increased to a record 36.5 percent in July driven by high food prices.

Currency devaluation and the Russia-Ukraine war have been the main factors contributing to the inflated prices. 

“Russia and Ukraine cover at least 85 percent of Egypt’s wheat and sunflower oil demand,” said Bhavik Mehta, deputy head of research at Century Financial.

• Egypt’s inflation surges to record 36.5% in July

• UAE signs $500m deal to supply wheat to Egypt
• Egypt’s wheat imports from Russia rose in March despite war

Russia and Ukraine had signed the Grain Export Deal last year, which allowed the export of grain through the Black Sea to stop the world food prices from soaring.

However, Russia pulled out of the deal in July this year, reigniting fears over global food supplies. 

“Initial market estimates were for inflation in Egypt to come down by around the middle or end of next year,” said Mehta.

“But Russia pulling out of the deal is a worrying sign.”

Watch the full video to find out why the recent $1.9 billion stake sale “doesn’t look promising” for Egypt’s economy.