x Abu Dhabi, UAEWednesday 26 July 2017

Egyptians hit by highest price surge in two years

Egyptian consumer prices posted the biggest monthly increase in more than two years in January after the pound weakened to a record.

Consumer prices in Egypt surged to their highest level in more than two years last month after the Egyptian pound dropped to a new low and foreign reserves slid their most in at least 15 years.

The annual rate climbed to 6.3 per cent from 4.7 per cent, according to data from the Central Agency for Public Mobilization and Statistics. The annual rate rose to 6.3 per cent from 4.7 per cent, the data showed.

Increases in the costs of electricity, vegetables and cigarettes helped to drive the increase, it said.Inflation was one of the catalysts that sparked protests and eventually led to the overthrow of Hosni Mubarak as president of Egypt in February 2011.

The pound has dipped 7.8 per cent against the US dollar since December 30, according to data compiled by Bloomberg.

It follows the central bank limiting the amount of dollars each lender can buy at currency auctions.

“Egypt’s net international reserves dropped a further US$1.4 billion [Dh5.14bn] to $13.6bn in January and now cover just 2.8 months of imports by our estimates,” wrote Simon Williams and Liz Martins, Middle East and North Africa economists in the Middle East and North Africa for HSBC in a research note last week.

“It is all the more worrying because the outflows occurred against the backdrop of continuously tightening capital controls.”
Despite the challenges facing Egypt’s economy, the president Mohammed Morsi last month was quoted as saying he hoped for economic growth of 5.5 per cent next year and 7 to 8 per cent in subsequent years.

He was also quoted as saying he expected about 750,000 new jobs being created in Egypt on an annual basis.

* Bloomberg News