On The Wires: Egyptian inflation accelerates as food prices - one of the main sparks for the revolution which toppled ex-president Hosni Mubarak - continue to increase
Egyptian food prices - one spark of the revolution - continue to rise
CAIRO // Egyptian inflation accelerated in March on rising food prices, one of the causes of the unrest that toppled President Hosni Mubarak.
The inflation rate in urban parts of Egypt, the gauge that the central bank monitors, rose to 11.5 per cent from 10.7 per cent in February, the Central Agency for Public Mobilisation and Statistics said on its website today.
"On a monthly basis, food is the main driver" behind inflation, Mohamed Abu Basha, an economist at the Cairo-based investment bank EFG-Hermes Holding SAE, said by telephone before the data was released. An increase in the inflation rate "does not justify any sort of action by the central bank on the interest rate," he said.
Eighteen days of protests in Egypt, sparked by falling living standards and high unemployment as well as a lack of democratic rights, led to the ouster of Mubarak on February 11. The economy is still reeling from the impact of the uprising. Growth may slow this fiscal year to between 2.5 and 3 per cent from 5.1 per cent in the year earlier, Finance Minister Samir Radwan said.
As protests continue, tourists have stayed away and factory output has been hit by strikes. Egypt's net international reserves fell for a third month in March to $30.1 billion (Dh110bn), the lowest level in more than three years, from $33.3bn in the previous month, after the bank bought pounds to prop up the currency.
The central bank on March 10 left its overnight deposit rate unchanged at a four-year low of 8.25 per cent and kept the overnight lending rate at 9.75 per cent to support economic growth. The Monetary Policy Committee, which is due to meet on April 28, last raised interest rates in September 2008.