Egypt’s annual urban consumer price inflation jumped to 35.7 percent in February from 29.8 percent in January, driven mainly by a rise in food and beverage prices, data from statistics agency CAPMAS showed on Sunday.
The increase in inflation comes well before a surge expected to result from last week’s devaluation of the currency. The central bank on Wednesday allowed the Egyptian pound to fall to about 50 to the dollar from 30.85, where it had been fixed for the past 12 months.
A poll of 14 analysts had expected February inflation to slow to a median 25.1 percent. Before February, Egypt’s inflation rate had been falling from a historic high of 38.0 percent in September.
Month-on-month, prices rose by 11.4 percent in February, up from just 1.6 percent in January. Food prices leapt by 15.9 percent, up from 1.4 percent in January.
“The sharp rise in the annual reading was fuelled by a surge in monthly inflation of both food (F&B) and non-food items and was in spite of the favourable base year contribution of -5.5 percent,” Allen Sandeep of Naeem Brokerage said in a note.
Core inflation, which excludes fuel and some volatile food items, rose to 35.1 percent in February from 29 percent in January, the central bank said later on Sunday.
Meanwhile, Egypt has taken major steps toward lowering its budget deficit by selling real estate as well as agreeing a support package with the International Monetary Fund, its finance minister said on Sunday.
Egypt’s primary budget surplus will rise to above 3.5 percent in the fiscal year that will begin in July, Finance Minister Mohamed Maait told a news conference on Sunday.
The primary surplus does not include interest payments, which in the seven months to end-January accounted for well over half of all expenditures and have kept Egypt deeply in deficit.
The finance ministry last month forecast a primary general budget surplus equal to 2.5 percent of gross domestic product for the current fiscal 2023/24 year.
Egypt agreed in February to sell the development rights to Ras al-Hikma, a prime Mediterranean resort destination, to Abu Dhabi for $24 billion and expects more than $20 billion from an IMF-led package signed last Wednesday.
The package includes $3 billion in funding from the World Bank, Maait said.
“The positive part is the Ras al-Hikma deal, a not-small portion of which will enter the general budget in pounds,” Mohamed Maait told reporters. “The total deficit will be less than targeted because of Ras al-Hikma.”
Maait said the budget had been hurt by a drop in Suez Canal and other revenue, while expenditure had surged because of a sliding currency and higher interest rates on Egypt’s debts.