© Reuters. FILE PHOTO: Two Egyptian women shopping in a supermarket in Cairo, Egypt, December 1, 2019. Picture taken December 1, 2019. REUTERS/Shokry Hussien
(Reuters) – Egypt’s annual urban consumer price inflation accelerated in March to 10.5%, its highest in nearly three years and faster than analysts had expected, data from the state statistics agency CAPMAS showed on Sunday.
The inflation figure, up from 8.8% in February, was greater than a median forecast of 10% in a Reuters poll of 14 analysts.
The price increases were caused in part by commodity shortages after the Russian invasion of Ukraine, sending inflation above the central bank’s 5-9% target and its 9.25% overnight lending rate.
Some analysts expect inflation to increase by even more in the months ahead.
“The rise in inflation trends is widely expected and will peak by August 2022, after which it will start to normalise,” said Radwa El Swaify of Pharos Securities Brokerage.
CI Capital’s Sara Saada, meanwhile, said the government was expected to increase fuel prices this month.
“Accordingly, we expect monthly inflation to peak in April to record annual inflation between 12.5-13%, which reflects higher petroleum products prices,” she said.
Naeem Research said the increase was largely attributable to higher commodity prices and devaluation of the currency on March 21.
“With the full impacts of the Egyptian pound depreciation (of 15% versus the U.S. dollar) expected to filter down into the economy, we expect inflation to rise further in April,” it said in a note.
(This story corrects name of investment bank to Pharos in fifth paragraph)