Egypt’s annual urban consumer inflation rate reached 32.7% year-on-year in March, according to data from the country’s statistics agency CAPMAS, coming close to an all-time record.
This marks an increase from 31.9% in February. Month-on-month, urban inflation slowed to 2.7% in March, down from 6.5% in February and 4.7% in January.
The surge in inflation in Egypt can be attributed to a series of currency devaluations that started in March 2022, a prolonged shortage of foreign currency, and continuing delays in imports into the country.
Egypt had devalued its currency by half since March 2022 after the economic vulnerabilities were exposed due to Russia’s invasion of Ukraine. Despite the month-on-month inflation slowing down, it remains one of the highest readings on record.
The increase in inflation was driven by rising food prices due to high seasonal demand during Ramadan, the impact of currency devaluation, especially in the informal market, and the shortage of raw materials, as stated by Naeem Brokerage in a note.
The median forecast of 13 analysts had predicted annual urban consumer inflation to rise to 33.6% in March.
Egypt’s highest inflation rate ever was 32.952%, reached in July 2017, eight months after the country devalued its currency by half as part of a previous $12 billion International Monetary Fund (IMF) support package.