Egypt’s annual headline inflation rate fell to a six-and-a-half-year low in August, registering 7.5% from 8.7% in July, opening the way for further interest rate cuts by the Central Bank of Egypt (CBE), Invest-Gate reports.
Annual core inflation fell to 5.9% in August from 4.9% a month earlier. On a monthly basis, core prices saw mild deflation, falling to -0.4% versus a 0.1% growth in July, CBE data showed on September 10.
“[August’s rate] falls well below the 9% target the [CBE] had set itself for the end of 2020. This paves the way for another large rate cut on September 26,” Jaap Meijer, head of equity research at Arqaam Capital, has reported to Reuters.
Besides, Radwa El-Swaify, head of research at Pharos Securities Brokerage, told the news agency that the August inflation level is “positive and gives positive signs for interest rates in the next meeting. We expect a cut of 1%-1.5%.”
Meanwhile, Nadene Johnson, an economist at NKC African Economics, told Reuters, “Nonetheless, with energy reforms complete, and with global oil prices on the bearish side, we expect inflation to ease gradually in the coming year, albeit slightly higher towards the end of this year.”
Egypt is nearing the end of a three-year USD 12 bn International Monetary Fund (IMF) economic reform program that saw inflation rise to a high of 33% in 2017, on the back of the second phase of energy subsidy cuts and EGP flotation in November 2016. Inflation then gradually decreased as inflationary pressure was eased.
In July 2019, the local government hiked domestic fuel prices as part of the terms of the IMF agreement, and the rise had been expected to push up prices for transport, food products, and other goods.
