On Food Prices’ Increases, Egypt Reports Higher Inflation rates

Egypt’s inflation rate accelerated in February on rising food prices, one of the causes of unrest that toppled President Hosni Mubarak in 2011.

The annual inflation rate in urban parts of Egypt, the gauge the central bank monitors, increased to 9.2 percent from 8.6 percent in January, the official statistics agency said on its website today. Food and beverage costs, the biggest component of the consumer-price index, increased an annualized 12.6 percent compared with 11.2 percent in January.

 February’s higher inflation figure follows “a depreciated exchange rate as compared to the previous year,” said Nada Farid, a Cairo-based economist at investment bank Beltone Financial. “We believe the Central Bank of Egypt will keep policy rates unchanged” at its upcoming meeting, “to balance between slight inflationary pressures and still-weak economic prospects”, Bloomberg reported.

Gross domestic product expanded 0.4 percent in the three months ended Dec. 31, compared with growth of 0.2 percent in the previous quarter and 5.6 percent a year earlier, according to a Ministry of Planning and International Cooperation report. The economy grew 1.8 percent in the fiscal year through June, the slowest pace in at least a decade.

 Egypt has requested a $3.2 billion loan from the International Monetary Fund, part of support sought by the government to boost an economy struggling to recover from a year of unrest in the wake of the uprising that ousted Mubarak last February.

 Egypt’s central bank on Feb. 2 left the overnight deposit rate unchanged at 9.25 percent and the overnight lending rate at 10.25 percent.