Egypt’s headline inflation rate rose to 36.8 percent in June, up from 34.8 percent in May, according to the Central Agency for Public Mobilization and Statistics (CAPMAS) on Monday.
The June reading is 2% higher than the previous month. It also represents more than double the inflation rate observed in June 2022, which was 14.7 percent.
CAPMAS ascribed this huge increase mostly to an increase in food and beverage costs, which jumped by 1.5 percent on a monthly basis and 64.9 percent on an annual basis in June.
The Central Bank of Egypt (CBE) has established two inflation objectives in accordance with Egypt’s pledges under its $3 billion loan arrangement with the International Monetary Fund (IMF), which was approved in December.
The goals are to attain an average inflation rate of 7% (2% ) by the fourth quarter of 2024 and 5% (2% ) by the fourth quarter of 2026.
However, the IMF loan agreement is presently being challenged. The first review, which was supposed to be finished on March 15, has yet to be completed.
The CBE maintained key interest rates steady at its most recent meeting in June. According to the IMF agreement, Egypt is committed to creating a flexible interest rate system with the primary goal of reducing rising inflation.
The CBE’s next meeting is set for August 3, the first of the fiscal year 2023/2024, which began on July 1.
In order to manage the inflationary surge that began in March 2022 as a result of the Ukrainian crisis, the CBE has raised interest rates by a total of 10% (1000 basis points), with 5% of the rise applied since the beginning of 2023.
