In September, Egypt experienced historic urban consumer price inflation, hitting an all-time high of 38.0%, up from August’s 37.4%, surpassing analysts’ forecasts.
The national statistics agency, CAPMAS, revealed that this marked the fourth consecutive month of record inflation, as indicated on the central bank’s website, which tracks data since 2000. Before the data release, a poll of 18 analysts predicted a September urban consumer inflation rate of 37.6%.
On a monthly basis, inflation accelerated, with prices rising by 2.0% compared to August’s 1.6%, reported Allen Sandeep of Naeem Brokerage. This rate was the highest since June, as per Reuters.
Sandeep highlighted significant increases in the food and beverage category: vegetable prices surged by 19.2%, fruits by 5.4%, dairy products by 5.4%, and sweet products by 2.9%.
To combat food inflation, the government announced an agreement with private manufacturers and retailers to reduce prices of essential foods by 15-25% and eliminate customs duties for six months, starting this month. The rapid expansion of the money supply in the past two years contributed to soaring prices and a 50% devaluation of the Egyptian pound against the US dollar since last year’s onset.
This drastic price surge exacerbates the financial strain on families already grappling with making ends meet. The economic crisis was triggered by Russia’s invasion of Ukraine, disrupting crucial food supplies and destabilizing global markets.
Prior to the crisis, the World Bank reported that 30% of Egyptians lived below the poverty line, with another 30% at risk of falling into poverty. According to the Ministry of Planning, Egypt’s foreign debt tripled in the past decade, reaching a record high of $165.4 billion this year.
Egypt, the most populous Arab country, relied on financial aid, receiving bailouts from Gulf allies and the International Monetary Fund (IMF). Last year, the IMF granted Egypt a $3 billion loan, contingent on the country’s permanent transition to a flexible exchange rate regime.