The annual core inflation rate in Egypt slowed last November to 35.9%, compared to 38.1% in October 2023, according to a statement issued by the Central Bank of Egypt (CBE).
The core consumer price index (CPI), prepared by the Central Bank, recorded a monthly rate of 1.0% in November 2023, compared to a monthly rate of 2.7%, year-on-year, and a monthly rate of 1.8% in October 2023.
Inflation had slowed to 38.1% in October from 39.7% in September, which is due to expectations of a continued slowdown in inflation in Egypt and reaching it in Q1 of 2024.
Slowing inflation rates
Core inflation determines the rate of change in prices, excluding the prices of highly volatile commodities, such as food and fuel prices, as they are most affected by fluctuations in market movement.
The general inflation rate for the country also declined on an annual basis, to 36.4% last November, compared to 38.5% in October. The decline was supported by a decline in food inflation to 63.9% compared to 71.7% in October, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).
The monthly inflation rate also slowed last November to record 0.9%, compared to 1.2 for October 2023, despite the increase in fuel prices.
Former Dean of the Faculty of Economics and Political Science at Cairo University Alia El-Mahdy believes that the slowdown is due to the presence of a state of recession that the Egyptian economy has been suffering over the course of 6 months, which is a major reason for the decline. “There are major restrictions on import operations, and the production lines in factories are not operating at full capacity. Therefore, the decline is due to the lack of movement in the economy.”
New financing is on the way
El-Mahdy explains that Egypt is on the way to obtaining big financing, whether from the European Union, which previously announced a loan package worth $10 billion for Cairo, or negotiating with the IMF to increase the latest loan to $5 billion from $3 billion, which will facilitate the process of saving dollars for import operations and therefore the level of inflation will continue to decline, but here it is due to the rotation of the wheel of production and not the recession.
During the last days of November, the difference between the exchange rate of the dollar against the pound in banks and the parallel market was about 20 pounds, and in some areas it exceeded that compared to the price of a dollar equal to 30.90 pounds.
The CAPMAS said in a statement that the reasons for the decline in inflation levels during November were due to the decrease in the prices of the meat and poultry group by (-1.5%), the fruit group by (-3.5%), the vegetables by (-4.7%), and the services group. Transportation (-2.3%), hotel services group (0.3%).
Reasons for decline
On the other hand, the group of cereals and bread recorded an increase by (5.2%), the group of fish and seafood increased by (0.1%), the group of dairy, cheese and eggs increased by (2.7%), the group of oils and fats jumped by (1.0%), and the group of sugar rose by (5.9%). The tobacco group also rose by (11.7%), while the the fabrics by (2.2%).
The ready-made garments group also increased by (1.7%), the cleaning, repair, and clothing rental group rose by (0.7%), the shoe group also rose by (0.6%), the cultural and entertainment services group rose by (0.1%), while the newspapers, books and stationery group rose by (0.3%).
World Bank Expectations
The World Bank expects the inflation rate in Egypt to decline to 26.7% in 2024, but it is considered the highest in the Arab region, and Yemen comes in second place at 17.3%.
Inflation remains high
Despite the decline in inflation levels last November, it is considered high in conjunction with the government's reduction of growth expectations for the Egyptian economy during the current fiscal year to the level of 3.5%, down from 4.2%.
Egyptian economic growth forecasts issued by the International Monetary Fund, the World Bank, and Standard & Poor's in the past few weeks ranged between 3.5-3.7% for the fiscal year 2023/24.
However, economic analyst Hany Tawfik, former president of the Egyptian Direct Investment Association said that the Egyptian economy is actually going through a recession, not a depression, and the difference between the two cases is very large as one of the causes of inflation, adding that measuring inflation levels on the basis of the monthly level is more accurate than the annual “in the annual there are many variables.” and it has been huge ... and it may give misleading indicators, unlike the monthly, which shows an accurate reading of the entry of foreign direct investments (FDI) during the recent period.”
Tawfik expected inflation levels to decline to the usual levels of the Egyptian economy, which is in the range of 12 to 13% during 2024, on the condition that structural adjustments are made that eliminate the phenomenon of two prices for the dollar in the parallel market, and the emergence of an economic government following the end of the presidential elections.
Follow the latest news on Google News
