Egypt's Annual Inflation Rate Drops to 29.8% in January

Capital Economics research institution said that inflation in January was lower than its expectations of 34% (Reuters)

Egypt's annual urban consumer price inflation dropped to 29.8% in January from 33.7% in December, the state statistics agency said on Thursday.
According to data published by the Egyptian Central Agency for Public Mobilization and Statistics on its website, prices rose by 1.6% in January month-on-month, up from 1.4% in December.
Food prices climbed by 1.4%, down from 2.1% in December. In the year to January, food prices rose by 47.5%, down from 60.5% in the year to December.
Capital Economics said that inflation in January was below its expectations of 34% and the average market expectation of 32.9%.
The research firm indicated that inflation is expected to continue to slow this year but added that the significant, looming devaluation of the currency means that inflation will remain at a high level for a more extended period.
It also referred to the delay in import movement, likely to be exacerbated by the unrest in the Red Sea.
The inflation rate is projected to remain higher than the range the Central Bank targets until mid-2025.
The Central Bank is expected to raise interest rates again to rebuild its ability to combat inflation.
The London-based institution indicated that price pressures will remain relatively strong despite the slowdown in inflation for the fourth month in a row.
- Devaluation of the Egyptian pound
According to Capital Economics, the upcoming agreement between Egypt and the International Monetary Fund (IMF) will undoubtedly be accompanied by a significant devaluation of the currency, expecting a reduction in the exchange rate to 65 pounds to the dollar.
The institution expected further tightening of monetary policy and that the Central Bank would raise the interest rate by no less than 300 basis points, bringing the interest rate on overnight deposits to 24.25%.