Egypt's inflation hits five-year high at 18.7 per cent

Rise in cost of living in November reflects country's economic woes

Farmers plant rice in the Nile Delta, north of Egypt's capital Cairo, amid a shortage of food imports. AFP
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Egypt's year-on-year inflation hit a five-year high of 18.7 per cent in November — up from 16.2 per cent the previous month.

Figures released on Thursday by the state statistics bureau underline the country's economic woes and the difficulty faced by most of its 104 million people to make ends meet in the face of soaring prices, particularly for food.

They follow a currency devaluation in October — the second this year — and continuing restrictions on imports that have hit manufacturers and contributed to price rises.

The rising inflation rate is “driven by higher production costs, amid a weakening Egyptian pound, in addition to supply shortages”, Naeem brokerage said in a forecast earlier this week.

Egypt's economy has been battered by the fallout from Russia's war in Ukraine, which followed a slump caused by the Covid-19 pandemic.

The government has sought help from the International Monetary Fund, with which it reached a preliminary deal in October for a $3 billion loan to overhaul its finances.

A shortage of foreign currency has led to a backlog of imports at the country's ports, leading to a shortage of imported goods and a significant increase in their prices.

Meanwhile, import restrictions have caused a shortage of foreign manufacturing components, disrupting production and threatening layoffs.

Prime Minister Mostafa Madbouly said on Wednesday that his government needed another two months to clear the backlog of imported goods.

“It will not be resolved overnight. We are doing everything we can,” he said.

Efforts to suppress “unrealistic” price increases were restricted by the government's concern that heavy-handed policies could lead to hoarding and profiteering.

“Intervening to control prices must be carefully weighed,” he said.

“Harsh measures by the government can cause the disappearance of goods. We deal with this rationally and through contacts with chambers of commerce.”

Mr Madbouly urged Egyptians to use hotlines to report unrealistically high prices for food items, stressing that the government cannot monitor every food outlet in the country.

He said a package of government measures had shielded the majority of Egyptians from the rise in prices since the Ukraine war began in February.

In addition to an increase in what some 70 million Egyptians can buy with state-subsidised food cards, the government has raised pensions and the minimum wage for state employees and put off scheduled increases in domestic electricity tariffs.

“Without these measures, prices would have gone to a totally different place,” Mr Madbouly said.

He acknowledged that the government's limited resources stopped it from doing more, saying: “We cannot deliver what's beyond our capabilities.”

Updated: December 08, 2022, 10:49 AM