Egypt’s annual consumer inflation rate fell to 12.5% in February from 23.2% in January, attributed to a base effect. The country faces challenges with rising prices and a weakened currency amidst substantial foreign debt and geopolitical pressures affecting economic stability. Relief for households remains elusive despite external financial assistance.
In February, Egypt’s annual consumer inflation rate decreased to 12.5%, marking a significant drop from January’s 23.2%, as revealed by official statistics. This reduction is attributed primarily to a base effect, as the current inflation rate is being compared to last year’s peaks of 36%. Economists, like Wael el-Nahas, explain this trend by highlighting last year’s extreme price surges during inflation’s height.
The Central Agency for Public Mobilisation and Statistics reported that the monthly inflation rate slightly declined to 1.4% in February, compared to 1.6% in January. Despite the easing inflation, many Egyptians are still struggling to cope with ongoing price increases, which have been a persistent issue since a foreign currency shortage led to significant inflation in the previous year.
Despite emerging from its economic crisis with the assistance of over $50 billion in loans and investments from the IMF, World Bank, and UAE following last March’s currency devaluation, tangible relief for households remains elusive. Timothy Kaldas emphasizes that while the rate of price increases has decreased, purchasing power continues to dwindle, causing stress for many.
The Egyptian pound has depreciated over 60% since February 2022, with inflation peaking at nearly 40% in August 2023. The country has implemented stringent economic reforms to meet the expanded IMF deal, which increased from $3 billion to $8 billion and included multiple fuel price hikes in 2024.
On a broader financial scale, Egypt’s foreign debt has surged to $155.2 billion by September 2024, primarily due to large infrastructure projects. Meanwhile, the ongoing conflict in Gaza has exacerbated economic difficulties, with Houthi rebel attacks impacting global trade and significantly hurting revenue from the Suez Canal, a vital source of income for Egypt. Last year, revenues from this key waterway plummeted by over 70%, adversely affecting the nation’s foreign currency flow.
The inflation rate in Egypt has significantly decreased to 12.5%, but real economic relief is still absent for households grappling with rising costs and diminished purchasing power. The country’s dependency on external loans and escalating foreign debt remains concerning, compounded by geopolitical tensions impacting key economic sectors. Continued monitoring of these financial indicators is vital for assessing Egypt’s economic recovery and stability.
Original Source: www.newarab.com
