Egyptians might see some relief on their grocery bills as inflation is expected to decline for a fourth straight month in June, according to a Reuters poll released today. This downward trend is likely to continue for the rest of the year, offering a glimmer of hope for citizens grappling with rising prices.
What They Are saying
The poll, which surveyed 17 analysts, predicts annual inflation in Egyptian cities to slow down to a median of 27.5% in June, compared to 28.1% in May. This follows a period of high inflation, with September 2023 reaching a record of 38%. However, there was a temporary spike in February 2024 to 35.7%.
The good news comes with a caveat. The government raised the price of subsidized bread, a staple food for millions of Egyptians, by 300% on June 1st, 2024. This increase could cause a temporary bump in inflation. However, most analysts believe the impact will be minimal due to the bread’s relatively small weight in the overall price index and a slowdown in inflation for other food items.
“Increased prices of subsidised bread should bring inflation to a higher plateau for the remainder of the year,” the bank said.
Why It Matters
While the majority of analysts foresee inflation continuing to cool, some predict a potential rise. Barclays Bank, for example, forecasts inflation to reach 32.3% due to the bread price hike. They believe it could create a “higher inflation plateau” for the rest of the year.
Analysts anticipate inflation to slow further in 2025. However, some warn of potential upward pressure due to expected government adjustments to prices of fuel, medicine, fertilizers, and natural gas. These increases could disrupt the anticipated downward trend.
In March 2024, Egypt implemented austerity measures as part of an $8 billion loan package from the International Monetary Fund (IMF). This included a devaluation of the Egyptian currency, aimed at controlling finances after years of foreign currency shortages. The government has prioritized reducing inflation as a key economic goal.
Bottom Line
The official inflation data for June is expected to be released by the Central Agency for Public Mobilization and Statistics (CAPMAS) on Wednesday. This data will provide a clearer picture of the current inflation situation in Egypt.
