Inflation in urban parts of Egypt accelerated for a sixth straight month on the back of soaring global commodities prices and a recent currency devaluation.
Consumer prices climbed 13.5 percent year-on-year in May, versus 13.1 percent the previous month, the state-run statistics agency CAPMAS said on Thursday. The highest level in three years, it was driven by a 24.8 percent increase in food and beverage prices, the largest single component of the inflation basket.
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On a monthly basis, inflation slowed to 1.1 percent in May from 3.3 percent the previous month, with the rise in food prices 0.6 percent versus 7.6 percent in April.
The figures show the growing pressures on consumers in the most populous Arab nation, which is among the world’s biggest importers of wheat and has been especially hard hit as the war in Ukraine sent food and energy prices spiraling.
Since March, authorities have devalued the pound and twice hiked Egypt’s interest rate while securing pledges of more than $20 billion in deposits and investments from Gulf nations. They have also requested talks with the International Monetary Fund on support that may include a loan.
Months of quickening price gains are weighing on Egypt’s inflation-adjusted interest rate, which has recently turned negative and undercut the country’s appeal to foreign investors in domestic bonds and bills. The North African nation has seen $20 billion in foreign outflows from its local debt market this year as Russia’s invasion of its neighbor tempers global appetite for riskier assets.
The central bank’s 200 basis points-hike last month — its biggest in nearly half a decade — showed an effort to regain that allure. The Monetary Policy Committee is due to meet again on June 23, when authorities will judge whether it’s too soon for another rate increase.
Read more: Egypt stands to receive $600 mln in wheat import, silo funding from World Bank, EU
