Egyptian inflation rises despite prospects, prompting Central Bank to intervene

(MENAFN) According to data released by the Central Agency for Public Mobilization and Statistics, the annual inflation rate in consumer prices within Egyptian cities skyrocketed to 35.7 percent in February, marking a significant escalation from January's rate of 29.8 percent. Notably, the cost of food and beverages surged by a staggering 50.9 percent year-on-year during the past month, exacerbating the financial strain on households across the nation. The inflationary pressure extended to monthly figures as well, with February witnessing an 11.4 percent increase compared to January's 1.7 percent.

These startling figures contradicted economists' expectations, as a Reuters poll had projected a decline in the inflation rate for the fifth consecutive month to 25.1 percent in February, down from January's 29.8 percent. In response to the worsening inflationary environment, the Central Bank of Egypt took decisive action by raising interest rates by 600 basis points just last week. Additionally, the central bank announced a shift towards allowing the value of the Egyptian pound to be determined by market mechanisms in the future, signaling a departure from previous interventionist policies.

The impact of these measures was immediately evident, as the value of the Egyptian pound experienced a sharp decline of more than 60 percent, plummeting to approximately 49.5 against the US dollar last Wednesday. This stark depreciation starkly contrasts with the relative stability the currency had maintained over the past year, with a consistent value around 30.9 pounds against the dollar. The move by the central bank underscores the urgency of addressing inflationary pressures and stabilizing the Egyptian economy amidst growing financial uncertainty and market volatility.

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