Egypt’s Urban Inflation Jumps Due To Pound’s Slide

Egypt’s urban consumer inflation shot up to 8.2 percent in the 12 months to February, statistics agency CAPMAS said on Sunday, as a sliding Egyptian pound pushed up food prices.

The rate jumped from an annual 6.3 percent in January, putting inflation at the highest since May last year as an economic crisis erodes living standards and deepens anger among Egyptians at a time of political and social turmoil.

February’s month-on-month rate also leapt to 2.5 percent from 1.7 the previous month.

Food and drink prices – a major spending item particularly for Egypt’s poor – rose 9.3 percent year-on-year last month, CAPMAS said in a bulletin posted on its website.

EFG Hermes economist Mohamed Abu Basha blamed the sharply higher inflation rate on the Egyptian pound’s fall, which has pushed up the price of imported food and fuel.

“It could rise more given the ongoing unrest and huge losses in the value of the Egyptian pound of around 10 percent of its value since the start of the year,” he told Reuters.

Abu Basha also cited higher prices of low-octane fuel used by bakeries and trucks that deliver goods “which usually have a direct impact on the prices of food and other products”.

Egypt has been rocked by frequent eruptions of street violence provoked by a variety of grievances. Two people died in Cairo on Saturday as local people protested about the acquittal of seven policemen over their handling of a soccer stadium riot last year. More than 70 people, mostly fans from Cairo, died in the Suez Canal city of Port Said during the riot.

Analysts say heavy pressure on living standards since the 2011 uprising that overthrew Hosni Mubarak has deepened social unrest and discontent with the Islamist government of President Mohamed Morsi.

Reuters

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