Egypt’s annual consumer inflation rate dropped to 12.5% in February, a significant decrease from 23.2% in January, indicating recovery from an economic crisis. Analysts describe the reduction as influenced by a base effect. Monthly inflation was recorded at 1.4% in February, slightly lower than January’s rate. Economic reforms and external support are contributing to this positive trend in Egypt’s economy.
According to recent official data, Egypt’s annual consumer inflation rate decreased to 12.5% in February, indicating a recovery from its most severe economic crisis. Despite the steady decline over recent months, analysts attribute the notable drop from January’s 23.2% primarily to a base effect. Wael el-Nahas, an economist, emphasized that the comparison with last year’s extreme inflation of 36% makes current levels appear lower than they are.
In February, the monthly consumer inflation rate recorded a modest 1.4%, slightly lower than the 1.6% observed in January, as reported by the Central Agency for Public Mobilisation and Statistics. The Egyptian economy, which relies heavily on imports, faced a parallel market crisis last year due to a significant shortage of foreign currency, causing daily increases in consumer goods prices in major cities.
Following a recent currency devaluation in March 2024, Cairo’s economy is starting to show signs of recovery, aided by a $50 billion bailout involving loans and investment from the World Bank, the United Arab Emirates, and the International Monetary Fund (IMF). Since February 2022, the Egyptian pound has depreciated over 60%, with inflation peaking at approximately 40% in August 2023.
The Egyptian authorities have implemented various reforms, including three fuel price hikes last year, as part of an agreement with the IMF, which has seen funding increased from $3 billion to $8 billion. The IMF board is anticipated to approve a $1.2 billion tranche during its fourth programme review; analysts expect a new proposed loan agreement from the lender to exceed $1 billion.
In summary, Egypt has witnessed a significant decrease in its inflation rate, reflecting the start of recovery following a severe economic crisis. The decline from 23.2% in January to 12.5% in February is largely attributable to a base effect. Supported by external financial aid and reforms under an IMF agreement, the economy is showing promising signs of stabilization despite ongoing challenges in the currency market.
Original Source: newscentral.africa
