Bloomberg News

Egypt’s April Inflation Slows as Food-Price Increases Ease

May 10, 2012

Egypt’s inflation rate declined in April as food prices, one of the causes of the unrest that toppled President Hosni Mubarak last year, rose more slowly.

Annual inflation in urban areas, the gauge the central bank monitors, fell to 8.8 percent from 9 percent in March, the official statistics agency said on its website today. Prices rose 1 percent in the month. Food and beverage costs, the biggest component of the consumer-price index, increased 10.8 percent from a year earlier compared with 10.9 percent in March.

The deceleration in inflation is “predominantly based on base effects,” Mohamed Abu Basha, a Cairo-based economist at investment bank EFG-Hermes Holding SAE, said in an e-mailed response to questions before the figures were published.

Egypt’s economic growth slowed to 0.4 percent in the final quarter of 2011, from 5.6 percent a year earlier, as political instability deterred tourists and investors. Talks with the International Monetary Fund for a $3.2 billion loan that Egypt requested in January have yet to conclude amid wrangling between the interim government and the Islamist-dominated parliament.

Egypt’s core inflation declined to an 8.36 percent annual rate in April from 8.68 percent in March, the central bank said on its website today.

The central bank has left the key overnight deposit rate unchanged at 9.25 percent this year, after a 1 percentage-point increase in November that some economists saw as an effort to avert a run on the Egyptian pound.

The country’s foreign reserves have plunged about 60 percent since the end of 2010. The decline halted in April when reserves rose for the first time since the uprising began in January last year. The central bank said a revival in tourism and a slowdown in capital flows out of the country helped stem the decline.

To contact the reporter on this story: Mariam Fam in Cairo at mfam1@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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