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Egypt Inflation Hits 29.6%

Egypt Inflation Hits 29.6%Egypt Inflation Hits 29.6%

Egypt’s annual inflation rate hit 29.6% in January, official figures showed Saturday, three months after the government floated the pound in line with an International Monetary Fund bailout.

Prices were rising even more quickly than in December, when inflation stood at 24.3%, the highest level since January 2011 when the Arab Spring uprising was at its height, AFP reported.

Consumers have been hit by surging prices since November when the government floated the currency and slashed fuel subsidies as part of an economic reform package linked to the $12 billion IMF loan deal.

The Egyptian pound, which had been pegged at 8.83 to the dollar, has been trading at nearly 19. Food prices have gone up even more than those of other goods, rising by 38.6% year on year.

IMF mission chief Chris Jarvis said last month that he expected inflation to ease significantly in the second half of the year. He said Egypt had made a “good start” on the reform package it had signed up to.

In addition to the pound’s devaluation, the government also raised tariffs on hundreds of imported items to up to 60% in December and introduced a value-added tax in September.

The IMF approved a first $2.75 billion tranche of emergency loans in November after Egypt’s foreign currency reserves plunged.

The tourism sector, which is one the main sources of foreign currency, has been badly hit by a persistent militant insurgency. 

Egypt is set to receive a second tranche of $1.25 billion.

 

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