Egypt’s annual inflation soared to an all-time high of 36.8 percent in June, according to data published by the Central Agency for Public Mobilization and Statistics (CAPMAS) on Monday, 10 June.
The country’s previous record, 34.2 percent, occurred in July 2017 – triggered by a sharp currency devaluation.
The latest data reveals that inflation jumped an additional two percentage points from May’s 34.8 percent, and more than doubled since last year’s 14.7 percent.
CAPMAS attributed the significant increase primarily to higher prices of food and beverages, which increased by 1.5 percent monthly and 64.9 percent annually in June.
Annual urban consumer price inflation also rose to a record 35.7 percent.
STRUGGLING TO MEET IMF CONDITIONS
The USD 3 billion (EGP 68 billion) loan package given to the Central Bank of Egypt (CBE) by the International Monetary Fund (IMF) in October 2022 initially intended to decrease inflation through two targets – lowering the average inflation rate to 7 percent by Q4 2024, and then to 5 percent by Q4 2026.
However, Egypt continues struggle in meeting the loan’s conditions, as the first review – originally scheduled for completion on 15 March—continues to experience delays due to the IMF’s lack of confidence in Egypt’s economic reform programs thus far.
The CBE kept key interest rates unchanged during its last monetary policy meeting on 22 June – contradicting the IMF deal’s condition of implementing a flexible interest rate to curb high inflation.
To contain the inflationary wave that began in March 2022 due to the conflict in Ukraine, the CBE has increased interest rates by a total of 10 percent (1000 basis points), with 5 percent of the increase implemented since the beginning of 2023.
The CBE’s next meeting is scheduled for August 3, which will mark the first meeting of the new fiscal year 2023/24.
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