Egypt inflation slows as food prices ease
The central bank is likely to keep its interest rates unchanged as inflation is still relatively high
Egypt's inflation rate declined in September as food prices, one of the causes of the unrest that toppled president Hosni Mubarak, rose at a slower pace.
The annual inflation rate in urban parts of Egypt, the gauge that the central bank monitors, fell to 8.2 percent from 8.5 percent in August, according to data posted on the website of the official statistics agency. "This is a base effect. We had various shocks in food prices that are fading away," Mohamed Abu Basha, a Cairo-based economist at EFG-Hermes Holding, Egypt's biggest publicly traded investment bank, said in a telephone interview.
The central bank is likely to keep its interest rates unchanged as inflation "is still relatively high," he said. Food and beverage costs, the biggest component in the consumer price index, increased an annual 9 percent, down from 12.2 percent a month earlier.
Core inflation accelerated to 8 percent from 7 percent a month earlier, the central bank said on its website on the tenth of this month. Eighteen days of protests, sparked by falling living standards, high unemployment and a lack of democratic rights, led to Mubarak's ouster on February 11. The unrest deterred tourists and foreign investors, hurting economic output. Gross domestic product grew 1.8 percent in the fiscal year that ended June 30, its weakest performance in at least 10 years, the government said last month.
The economy contracted 4.2 percent from January to March as revenue from industries plummeted. The central bank on August 25 left its overnight deposit rate unchanged at 8.25 percent, the lowest level in almost five years, to support economic growth. The rate hasn't changed since September 2009.
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