CAPMAS: Egypt Consumer Prices Rise at Slowest Pace in Over Two Years

The annual inflation rate in urban parts of Egypt in May rose at its slowest pace in more than two years, giving the central bank some breathing room ahead of fuel subsidy cuts expected within weeks.

Consumer prices were 11.4 percent higher, according to the statistics agency, CAPMAS. Prices rose 0.2 percent month-on-month, compared with 1.5 percent in April, as food and beverage costs, the largest single component in the price basket, fell 0.2 percent.

The annual rate is now near the bottom range of the central bank’s target of 13 percent  The bank’s monetary policy committee is scheduled to meet toward the end of the month to discuss interest rates.

Inflation may have moderated, but the rate could accelerate again if the government goes ahead with another round of fuel subsidy cuts. The reductions are key to cutting costs, but also have the potential to further stoke inflation and further burden the tens of millions of Egyptians struggling with the impact of reforms launched in 2016.