Egypt’s Urban Consumer Inflation jumps to 14% in June
Jasmine RevolutionThe rebellion that launched the Arab Spring is named after Tunisia's yellow state flower. Protests broke out in Tunisia in late 2010, sparked by a street vendor setting himself on fire. The discontent spread to other nations in North Africa and the Middle East, leading to uprisings in Egypt and Libya, and an ongoing civil war in Syria.
Egypt’s urban consumer inflation jumped for a third straight month in June as consumer demand spiked during Ramadan, official data showed on Sunday.
Food demand normally surges during the Muslim holy month because of heavy consumption following the dawn-to-dusk fasting period. Ramadan this year began on June 6 and ended on July 5.
Urban consumer inflation accelerated to 14% in June from 12.3% in May, the statistics agency said.
Core inflation, which excludes items such as fruit and vegetables as their prices fluctuate widely, also rose to 12.37% year-on-year in June, up from 12.23% in May, the central bank said on Sunday.
The import-dependent country of 90 million has been under pressure since a 2011 uprising drove away tourists and foreign investors, straining its foreign reserves which halved to $17.5 billion in June.
The central bank plans to raise reserves to $25 billion by year-end.
The central bank devalued the pound in March by about 13%, and then hiked interest rates a few days later by 150 basis points at its MPC meeting on March 17 to curb inflationary pressures. It hiked rates again at its meeting on June 16 by 100 basis points as inflationary pressures persisted.
Economists say the pound is still over-valued and expect another devaluation in 2016/17, a move that could further stoke inflation.
President Abdel Fattah al-Sisi is under increasing pressure to revive the economy and keep prices under control to avoid any backlash from the public whose protest demands in the 2011 revolution included “bread, freedom and social justice.”
The government said late last year it would control the prices of 10 essential commodities to help restrain inflation. Price movement subsequently eased but surged back again after the March devaluation.