The Central Agency for Public Mobilization and Statistics (CAPMAS) reported that the annual urban headline inflation increased to 37.4% in August 2023, compared to 36.5% in July 2023. The agency also said that the monthly inflation rate rose by 1.6% in August, compared to 1.9% in July.
According to a statement issued by CAPMAS on Sunday, the general consumer price index for the whole country reached 184.0 points in August, showing an increase of 1.6% over July. The annual inflation rate for the whole country recorded 39.7% in August, compared to 38.2% in July and 15.3% in August 2022.
The statement attributed the rise in inflation to the increase in the prices of several items, especially food and beverages, which increased by 2.2% every month and by 71.9% on an annual basis. Other items that witnessed price increases include alcoholic beverages and tobacco (5.4% monthly, 57.6% annually), clothing and footwear (0.8% monthly, 23.6% annually), housing, water, electricity, gas and fuel (0.8% monthly, 7.2% annually), furniture, equipment, home appliances and maintenance (2.0% monthly, 42.0% annually), health care (0.7% monthly, 22.8% annually), transport and communications (0.5% monthly, 15.2% annually), culture and entertainment (0.5% monthly, 27.9% annually), restaurants and hotels (0.7% monthly, 49.5% annually), and miscellaneous goods and services (1.1% monthly, 29.8% annually). The only item that did not record any change was education, which remained at a steady increase of 7.7%.
Moreover, the monthly core inflation, computed by the Central Bank of Egypt, recorded 0.3% in August 2023 compared to 0.6% in the same month of the previous year, and 1.3% in July 2023. Accordingly, the annual core inflation rate recorded 40.4% in August 2023, compared to 40.7% in July 2023.
The high inflation rate prompted the Central Bank of Egypt (CBE) to raise its basic interest rates by 1% on August 3, reaching 19.25% for deposits, 20.25% for lending, and 19.75% for the credit and discount rate and the main operation price. The Monetary Policy Committee of the CBE said that this decision was taken in light of the high inflation expectations in some major economies, which exceeded their target rates.
The committee said that the main interest rates will remain high, as the global inflation rates are still higher than the target levels, which leads to tighter global financial conditions in general. It added that the inflation rates are expected to peak in the second half of the year and then decline to the previously announced target levels, supported by the restrictive monetary policies so far.
The committee stressed that the interest rate decisions depend on the expected inflation rates and not the current ones. It also said that it will continue to monitor the economic developments and expectations in the next period, and will not hesitate to use all the available monetary policy tools, to maintain restrictive monetary conditions and achieve the target inflation rates of 7% (±2%) on average in the fourth quarter of 2024 and 5% (±2%) on average in the fourth quarter of 2026.
