Egypt’s annual urban consumer price inflation eases in January - GulfToday

Egypt’s annual urban consumer price inflation eases in January


The headline indicator fell 0.4%, the same pace of deflation as in December. File/Reuters

Egypt’s annual urban consumer price inflation eased to 4.3% in January from 5.4% in December, the official statistics agency CAPMAS said. Month-on-month, the headline indicator fell 0.4%, the same pace of deflation as in December, the agency said.

Statistics data showed a drop of 0.4% year-on-year in the prices of food and beverages, driven by a sharp decline in the cost of items such as potatoes, tomatoes and seasonal greens.

“A surge in local food stocks as well as low local demand both contributed to inflation slowing in January. Egypt is well-placed to face any upcoming price increases because of the commodity price rallies going on worldwide,” said Allen Sandeep of Naeem Brokerage.

Core inflation, which strips out volatile items such as food, fell to 3.673% in January from 3.803% in December, data from the central bank showed on Wednesday.

“We are due for another rate cut, but the timing of it would depend on a few variables including upcoming commodity price shocks, including oil and food, liquidity and carry-trade attractiveness,” Sandeep added.

Egypt’s central bank kept its key interest rates on hold at its last monetary policy meeting on Feb. 4, after slashing rates last year to support the coronavirus-hit economy. The bank set an inflation target of 5%-9% in December.  Meanwhile, Egypt’s farmers are tapping new technology to save water and boost crops.

A 2019 report by the Egyptian Centre for Strategic Studies noted that every year agriculture consumes more than 85% of the country’s share of the Nile, which provides the bulk of Egypt’s water supply.

Officials say Egypt currently has about 570 cubic metres (150,000 gallons) of water per person per year. Experts consider a country “water poor” if its annual supply is less than 1,000 cubic metres per person.

In 2017, Egypt embarked on a 20-year strategy to tackle its water challenges, which experts say are becoming increasingly urgent in the face of a growing population, climate change-related drought and fears of losing much of its access to the Nile River’s waters.

According to Egypt’s statistical agency, about 70% of the country’s water comes from the Nile, which amounts to 55.5 billion cubic meters a year based on a 1959 deal with upstream Sudan.

But the deal is not recognised by Ethiopia, which has now started filling the reservoir behind its new Grand Renaissance mega-dam upstream from Egypt.

Some agricultural experts are sceptical about the effectiveness of the new mobile irrigation system, pointing to the cost and the fact that many farmers will not be familiar or comfortable with the technology.

Abbas Sharaky, an associate professor of economic geology at Cairo University, said the system could benefit large commercial farmers, but would not be useful to many small-scale farmers.

“Some companies in Egypt are already starting to apply (mobile irrigation technology) in agriculture for better quality and management,” he told the Thomson Reuters Foundation.

“But applying it to individuals would be difficult because they would need training and adequate resources.”

Youssef El Bahwashi, an agricultural engineer who has a farm in Giza city and has not installed the new system, said many farmers do not even use.

When Eman Essa’s husband died and she took over running his farm in southern Egypt, she found herself guessing when the wheat crop needed watering.

Essa, 36, would often end up either using too much water on her 2-feddan (2-acre) plot outside Samalout city or hiring another farmer to take over the irrigation duties, she told the Thomson Reuters Foundation.

Then, in December last year, the mother of four joined a new government project that uses sensors to allow her to see exactly when the soil is dry and just how much water she needs - all from an app on her phone.

“When I first heard about the new system, I did not know exactly how it would benefit me. But when people showed me how it works, I found it really helpful and (it) would save me a lot of effort and money,” she said in a phone interview.

In the few weeks since she adopted the system, Essa has been using 20% less water and her labour costs have dropped by nearly a third.

The system, developed by the Ministry of Water Resources and Irrigation and Cairo’s MSA University, uses a sensor buried in the soil to measure moisture levels and a transmitter to send the data to the user, who accesses it through a mobile app.

Even if they are away from their fields, farmers can tell whether their crops need more water or have had enough.

Essa is one of dozens of farmers who have started using the new system, launched in December, in Upper Egypt’s Minya governorate and in New Valley governorate in the southwest.


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