Egypt’s annual urban headline inflation rose to 35.7 per cent in February from 29.8 per cent in January, the acceleration was driven by higher core food and non-food prices, the Central Bank of Egypt (CBE) said in a statement on Monday.

Food inflation increased to 50.9 per cent from 47.9 per cent in January, while non-food inflation rose to 26.1 per cent from 19.6 per cent in the same period.

In February 2024, annual core inflation reversed its seven-month downward trend, rising to 35.1 per cent from 29.0 per cent in the previous month.

The increase was driven by price hikes in core food, services, and retail items. Monthly core inflation also hit a record high of 13.2 per cent in February 2024, up from 8.1 per cent in the same month last year.

Monthly urban inflation hit 11.4 per cent in February, the first double-digit rate on record, up from 6.5 per cent in the same month last year.

This surge was driven by elevated inflation expectations and underlying inflation due to foreign exchange market imbalances. The timing of recent measures by the Monetary Policy Committee on March 6, 2024, is crucial, the report added.

Factors contributing to the price increase include seasonal effects like Ramadan-impacted food prices. Additionally, higher prices for tobacco, medical products, household cleaning products, appliances, personal care items, and rent have also contributed to the inflationary pressures.

Rural annual headline inflation rose to a record 36.3 per cent in February, up from 32.5 per cent in January. Nationwide annual headline inflation also increased to 36.0 per cent from 31.2 per cent in the same period.

Contributors to monthly inflation

• Poultry and red meat prices rose by 32.6 per cent and 19.6 per cent, respectively, contributing 2.97 percentage points to monthly inflation.
• Dairy prices surged by a record 11.4 per cent, adding 0.53 percentage points.
• Oils and fats increased by 20.2 per cent, contributing 0.66 percentage points.
• Pasta and market rice prices went up by 30.7 per cent and 10.6 per cent, respectively, adding 0.50 percentage points.
• Fish and seafood prices hiked by 13.0 per cent, contributing 0.38 percentage points.
• Other core food items, including eggs, pulses, sugar, tea, and coffee, increased, adding 1.42 percentage points.
• Services prices increased by 6.7 per cent, driven by higher private school tuition, private lessons, restaurants, cafes, and rental values, contributing 1.88 percentage points.
• Retail items prices rose by 10.7 per cent, contributing 1.39 percentage points, driven by medical products, stationary, appliances, personal care products, and clothing.

Monthly core inflation was influenced by price changes in core CPI items. Core food items accounted for 8.80 percentage points of monthly core inflation, services contributed 2.56 percentage points, and retail items contributed 1.89 percentage points, CBE concluded.