Egypt’s inflation has surged to a record-breaking 38% in September, surpassing expectations, as reported by Reuters.
The annual urban consumer price inflation, as indicated by data from the statistics agency CAPMAS, marked a steep increase from August’s 37.4%.
This surge in inflation marks the fourth consecutive month of record highs, as reported on the central bank website, which has data dating back to 2000.
Egypt’s inflationary trends and economic factors
The primary drivers of this inflationary trend were food and beverage prices. According to a poll of 18 analysts, the median forecast had predicted a rise in annual urban consumer inflation to 37.6% in September.
Before the spike in inflation witnessed in June, the previous high was 32.95% recorded in July 2017. On a monthly basis, inflation accelerated, with prices increasing by 2.0% in September compared to a 1.6% increase in August, as noted by Allen Sandeep of Naeem Brokerage.
This represents the fastest pace of increase since June. The rapid growth of money supply over the past two years has played a significant role in the rapid price hikes, leading to a nearly 50% depreciation of the Egyptian currency against the U.S. dollar since March 2022, adversely affecting the living standards of many Egyptians.
In September, the cost of food and beverages climbed significantly, with a month-on-month increase of 3.6%. This included surges in vegetable prices by 19.2%, fruits by 5.4%, dairy products by 5.4%, and sugar items by 2.9%, according to Sandeep.
Egypt government’s measures to tackle food inflation
To combat food inflation, the government announced on Monday that it had reached an agreement with private producers and retailers to reduce prices on essential food items by 15-25% and exempt them from customs duties for a period of six months.
Core inflation, which excludes volatile items such as food and fuel, declined slightly to 39.7% in September from 40.4% in August, as reported by the central bank.