CAIRO (Reuters) – Egypt’s inflation is forecast to have declined for a sixth month in August, helped by a favourable base effect, but some analysts say it is likely to have increased month on month after a series of government-led price hikes.

Egypt in March signed an $8 billion financial support package with the International Monetary Fund that is helping it to control inflationary monetary policy – but which requires it to increase many domestic prices.

The government as a result has raised the price of many subsidised products to battle a budget deficit that hit 505 billion Egyptian pounds ($10.3 billion) in the fiscal year that ended on June 30.

According to the forecasts of 19 analysts, annual urban consumer inflation slowed to a median of 25.1% in August from 25.7% in July.

“We expect urban inflation to decelerate to 24.9% y-o-y for August on a favourable base effect. However, we anticipate a 1.0% m-o-m increase on the recent energy and transportation cost hikes at the beginning of August,” said Heba Mounir of HC Securities.

Naeem Holding, which forecast annual headline inflation of 24.8%, predicted an increase of 1.24% month on month from July.

This was due to higher summer produce prices, fuel hikes of 10-15% near the end of July, a 25-33% jump in metro tickets at the beginning of August and a 21-31% increase in electricity tariffs, partly in August.

Inflation has fallen gradually from September’s record high of 38.0%, turning Egypt’s benchmark real interest rates positive in July for the first time since January 2022.

A median of five of the analysts predicted that core inflation, which strips out volatile items such as fuel and some types of food, would decline to 23.9% from 24.4% in July.

The state statistics agency CAPMAS is due to release August inflation data on Tuesday.

This post appeared first on investing.com

By admin