Analysts expect decline to continue amid recent price increases
(MENAFN) Analysts anticipate that Egypt’s inflation will continue to decrease for the sixth consecutive month in August compared to the same period last year, primarily due to a base effect. However, there is an expectation of a potential rise in inflation on a monthly basis, given the recent series of price hikes implemented by the government. In March, Egypt entered into an USD8 billion financial support agreement with the International Monetary Fund to address its inflationary pressures while implementing necessary price increases on various local products. This agreement is part of the government's strategy to manage a substantial budget deficit, which amounted to 505 billion Egyptian pounds (USD10.3 billion) for the fiscal year ending June 30.
The government’s measures have led to increased prices for a range of subsidized products, aiming to mitigate the budget deficit. For August, the annual urban consumer price inflation is forecasted to slow to 25.1 percent, down from 25.7 percent in July, according to the median predictions of 19 analysts. Heba Mounir of HC Securities expects urban inflation to moderate to 24.9 percent year-on-year in August due to the favorable base effect. Nonetheless, she projects a 1.0 percent month-on-month increase owing to recent hikes in energy and transportation costs introduced at the beginning of August. Similarly, Naeem Holding for Investments predicts an annual inflation rate of 24.8 percent in urban areas, with a 1.24 percent monthly rise from July.
These forecasts take into account the recent increases in several service prices over the summer months, including fuel prices, which rose by 10 to 15 percent towards the end of July, metro ticket prices, which saw a jump of 25 to 33 percent at the start of August, and electricity prices, which increased by 21 to 31 percent.
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