Food prices drive inflation to a five-month high, CAPMAS

Annual headline urban inflation accelerated for the second consecutive month to 5.7 percent in November from 4.6 percent in October, according to CAPMAS figures

The increase was driven by higher food prices, which single-handedly brought annual inflation to its highest since May. Monthly headline figures remained muted at 0.8 percent, but higher than 0.3 percent in November 2019. The monthly rate was, however, lower than October’s 1.8 percent.

Food prices across the country edged up 3.2 percent on a monthly basis (and 4 percent y-o-y), Capmas said. Vegetable prices were the culprit, increasing over 25 percent on a monthly and annual basis, and offsetting a softer drop in the price of fruits.

Annual core inflation — which strips out volatile items such as food and fuel — rose marginally to 4 percent in November, from 3.9 percent last month, according to central bank figures. Monthly core inflation, meanwhile, fell to 0 from 1.7 percent in October.

Inflation is expected to accelerate in the coming months as food prices are likely to increase further and as the price of Brent crude rebounds, Capital Economics said. The EGP is also forecast to weaken in the months ahead, adding pressure on the headline rate. However, inflation isn’t likely to exceed the mid-point of the CBE’s range, it added.