Egypt’s inflation rate soars to record high

Egypt’s official annual headline inflation rate leapt in February to a higher-than-expected 31.9%, its highest in five and a half years, while core inflation skyrocketed to a record 40.26%, according to official data published on Thursday.

The soaring inflation follows a series of currency devaluations starting in March 2022, a prolonged shortage of foreign currency and a continuing backlog of getting imports out of ports.

It highlights the extent of economic pressures that have built since early last year and will renew pressure on the central bank’s Monetary Policy Committee, scheduled to meet on March 30, to raise interest rates.

Annual urban consumer inflation was the highest since August 2017, nine months after another steep devaluation when it reached 31.92%. It has been climbing steadily for more than a year, reaching 25.8% in January, according it data from statistics agency CAPMAS.

Economists had expected a reading of 26.7%, according to the median forecast in a Reuters poll of 14.

February’s figure for core inflation, which strips out volatile items such as food, is the highest since the central bank began publishing the data in November 2009. Core inflation stood at 31.2% in January.

Six analysts had forecast February core inflation of 32.85%.

The inflation increase was led by food prices, which rose 14.4% month-on-month and 61.8% year-on-year, Mohamed Abu Basha of EFG Hermes said in a note.