Egypt’s annual inflation rate fell to 12.8% in February from 24.0% in January, exceeding analysts’ predictions of 14.5%. Monthly price increases were 1.4%, with food prices rising by 3.7% annually. Recent economic measures include currency devaluation and an $8 billion IMF support package, contributing to financial stabilization.

Egypt’s annual urban consumer price inflation significantly decreased to 12.8% in February from 24.0% in January, according to the statistics agency CAPMAS. This decline surpassed analysts’ expectations, who had predicted a median inflation rate of 14.5% based on a recent Reuters poll. The decline is attributed to a base effect, indicating that the unusually high price hikes of the past two years are no longer impacting current statistics.

In February, prices rose by 1.4% compared to January. Specifically, prices for food and beverages increased by an annual rate of 3.7%, with a month-over-month uptick of 0.2%. Inflation had been on the rise since early 2022, primarily due to the Russian invasion of Ukraine, which led to substantial capital withdrawals from Egypt’s treasury markets.

Headline inflation peaked at 38.0% in September 2023, exacerbated by rapid increases in the money supply. Central bank data revealed that the M2 money supply grew by an unprecedented 32.1% in the year ending January. To stabilize its economy, Egypt devalued its currency, increased interest rates by 600 basis points, and secured an $8 billion financial support package from the International Monetary Fund a year ago, measures that have begun to yield improvements in its fiscal situation.

Egypt’s inflation rate has shown a notable decline to 12.8% in February, far below the January figure of 24.0%. The decrease aligns with analysts’ expectations, as past surges have been mitigated. Despite recent upward pressures on commodity prices, fiscal reforms and currency adjustments are playing a pivotal role in stabilizing Egypt’s economy.

Original Source: www.zawya.com