Egyptian inflation to fall for fifth month in row amid currency depreciation
Date
3/10/2024 5:27:44 AM
(MENAFN) Recent findings from an opinion poll conducted on Friday suggest a continued downward trend in Egypt's inflation rate, marking the fifth consecutive month of decline in February. This projection is attributed to a positive effect stemming from the base reading, providing a glimmer of optimism amidst ongoing economic shifts. However, analysts remain vigilant, closely monitoring the repercussions of the government's recent decision to sharply devalue the currency and increase interest rates.
Drawing on the insights of 14 analysts surveyed by Reuters, it's anticipated that the annual urban consumer price inflation will have moderated to 25.1 percent in February, down from 29.8 percent in January. While this aligns with expectations, some analysts anticipate a swifter deceleration in the inflation rate.
James Swanston of Capital Economics holds an optimistic outlook, forecasting a further easing of inflationary pressures to 23.6 percent on an annual basis in February, propelled by the continued positive effects of the baseline reading. Similarly, Heba Mounir from HC Securities Brokerage anticipates a slowdown in urban area inflation to 27.1 percent on an annual basis and 4.3 percent on a monthly basis, attributing this to the influence of the base reading.
Moreover, core inflation, excluding fuel and certain volatile food items, is projected to decrease to 23 percent in February, down from 29 percent in January, according to an average of five analysts surveyed. This underscores a broader trend of inflation moderation, albeit with nuances in different economic indicators.
However, amidst these projections, the recent sharp devaluation of the Egyptian pound on Wednesday to approximately 49.5 against the dollar, compared to 30.85 pounds maintained consistently over the past year, injects a note of uncertainty into the economic landscape. This sudden currency fluctuation adds a layer of complexity to Egypt's inflation dynamics, prompting stakeholders to recalibrate their assessments and strategies in response to evolving market conditions.
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