Cairo, UAE–Egypt’s annual urban consumer inflation in December shot up to 21.3 percent from 18.7 percent in November, exceeding analyst expectations.
Data from the statistics agency CAPMAS showed on Tuesday that the inflation figure was the highest since December 2017, when it hit 21.9 percent. The price rises followed a currency devaluation in October and restrictions on imports.
Five economists also forecast that core inflation, due later on Tuesday, would come in at a median 23.6 percent, up from 21.5 percent in November.
The central bank allowed the Egyptian pound to depreciate by about 14.5 percent on Oct. 27 and let its value continue to weaken slowly and incrementally in November and December.
“Food and beverages were up 4.6 percent month-on-month (adding to the 4.5 percent in November), impacted mainly by bread and cereals, dairy, vegetables and meat,” said Allen Sandeep of Naeem Brokerage.
This goes somewhat towards absorbing a 25 percent devaluation in late October but portends more inflation to come, Sandeep said.
“Now combined monthly inflation has risen by around 7 percent over three months. This is close to a 30 percent pass-through to the urban CPI index. With the new round of devaluation ongoing, which we expect to be roughly 15 percent, we can expect annual CPI to touch 25 percent by February.”
Egypt’s surging prices will add to pressure on the central bank’s Monetary Policy Committee to raise interest rates when it next meets on Feb. 2.