(AFP Photo)
By Doaa Farid and Dina Ahmed
The overall annual Consumer Price Index (CPI) rate registered 11.15% in October to reach 143.3 points, a high rate compared to October 2012, according to the Central Agency for Public Mobilization and Statistics (CAMPAS).
According to CAPMAS’s latest inflation report on 10 November, Egypt’s annual urban consumer inflation rate surged by 1.1% to reach 10.4% in October, compared to 10.1% in September and 9.74% in August.
Former Vice Chairman for the Principal Bank for Development and Agriculture Credit Tarek Helmy attributed the rise in inflation to the decrease of shown products in the market along with an increase in consumption, “which causes the hike in food prices,” he said.
“In order to curb inflation, the production must be increased,” Helmy said, adding that boosting Foreign Direct Investment (FDI) will help in cutting prices.
Echoing this opinion, Reda Essa, an economic expert at the Citizens Against Price Rises Association, stressed on the need to raise the country’s production in order to be able to repay the loans.
Essa expressed his dissatisfaction with the rising inflation rate, stating that the 2011 uprising was a result of rising prices and an unstable economic situation.
Helmy pointed out that raising interest rates will result in people keeping their savings in banks, “which will decrease the demand on products and consequently curb inflation,” he said.
The Monetary Policy Committee at the Central bank of Egypt (CBE) decided in September to cut, for the second time in a row, the overnight deposit rate, overnight lending rate and the rate of the CBE’s main financing operations by 50 basis points to 8.75%, 9.75%, and 9.25%, respectively. The discount rate was also cut by 50 basis points to 9.25%.
However, the CBE kept interest rates unchanged in November, which was seen by analysts as a way to curb inflation.
Essa discussed how rising inflation will reflect on the new policy for the minimum wage, saying that the minimum wage law will not be effective with unfixed prices “that are rising almost every day”.
