In February, Egypt’s annual inflation dropped to 12.8% from 24.0% in January, surprising analysts. Month-on-month prices rose 1.4%, with food and beverage prices up 3.7%. This decrease follows the effects of high M2 money supply growth and measures taken to stabilize the economy after external shocks.
Egypt’s annual urban consumer price inflation significantly decreased to 12.8% in February from 24.0% in January, according to the Central Agency for Public Mobilization and Statistics (CAPMAS). This decline surpassed analysts’ expectations, largely due to the base effect, as previous years’ high price increases are no longer impacting current statistics.
In a recent poll conducted by Reuters, fifteen analysts anticipated a median inflation drop to 14.5%. Month-on-month figures revealed a 1.4% increase in prices from January to February, with specific food and beverage prices rising by 3.7% annually, contributing a 0.2% increase from the previous month.
Inflation had been on the rise since early 2022, spurred by the economic ramifications following the Russian invasion of Ukraine, which led to substantial withdrawals by foreign investors from Egyptian treasury markets. The peak inflation rate recorded was 38.0% in September 2023, driven in part by a significant 32.1% increase in the M2 money supply by the end of January.
In efforts to stabilize its economy, Egypt devalued its currency last year, raised interest rates by 600 basis points, and secured an $8 billion financial support package from the International Monetary Fund. These initiatives have played a crucial role in managing the country’s financial challenges.
Egypt’s February inflation figures indicate a notable improvement, with rates falling to 12.8% from 24.0% the previous month. Factors contributing to this decline include the cessation of prior inflationary pressures and a managed monetary policy. The economy continues to adjust after substantial external shocks, emphasizing the effectiveness of recent economic measures and support packages.
Original Source: www.zawya.com
