Egypt inflation eases as economy strengthens

Traditional decorations for sale in Cairo, Egypt. Inflation has declined. Reuters

Egypt's annual urban consumer price inflation eased to 13 per cent in April from 14.2 per cent in March, official statistics agency Capmas said on Thursday.

"The figures are lower than our expectations," said Radwa El Swaify, head of research at Pharos Securities Brokerage. "This month was the lowest month-on-month increase in three years."

Urban inflation rose 0.5 per cent month-on-month in April, Capmas said, down from 0.8 per cent in March.

Egypt's core inflation eased to 8.1 per cent in April from 8.9 per cent in March, the central bank said.

Egypt has been carrying out an IMF-backed economic reform programme since 2016 which saw inflation rise to a high of 33 per cent the following year.

It has since subsided, although rising fruit and vegetable prices have prolonged inflationary pressures.

"We expect next month's figures to see a rise between 0.5 and 1 percentage points and for current rises in vegetable prices to be reflected," Mr Swaify said.

Continuous increases in fruit and vegetable prices had prompted the interior ministry and the military to sell some basic foods at below-market prices, Reuters said.

"Based on our analysis, increased efforts made by the government to provide the market with ample supplies of volatile food items [fruits, meat and vegetables] prior to the Ramadan season, has helped cool off the supply/demand pressures on inflation," Naeem Brokerage, which predicted headline inflation would fall to 13.2 per cent, said in a note on Wednesday.

Campas said urban food and beverage prices saw a rise of 13 per cent year-on-year and 0.5 per cent month-on-month.

The news comes amid an upturn the the country's economy that is giving hospitality companies renewed confidence. European hotel operator Accor will open more than 30 new hotels during the next two years in Egypt, according to Bloomberg, which its chief executive said is rebounding after “external factors” hurt the industry.

“Egypt is resurrecting after 10 years of a tough situation,” its chief executive for Middle East and Africa Mark Willis said last week in the Kenyan capital, Nairobi. Egypt has overtaken Kenya’s coastal region as the preferred destination for European tourists and investors, he said, and revenue per available Accor room there has risen 20 per cent year-on-year.