Egypt’s December inflation accelerates to annual 21.3%

CAIRO (Reuters) – Egyptian annual urban consumer inflation in December rose to 21.3% from 18.7% in November, exceeding analyst expectations, data from the statistics agency CAPMAS showed on Tuesday.

The inflation figure was the highest since December 2017, when it hit 21.9%. The price rises followed a currency devaluation in October and restrictions on imports.

The median forecast in a Reuters poll of 15 economists had projected inflation of 20.50%. Five economists also forecast that core inflation, due later on Tuesday, would come in at a median 23.6%, up from 21.5% in November.

The central bank allowed the Egyptian pound to depreciate by about 14.5% on Oct. 27 and let its value continue to weaken slowly and incrementally in November and December.

“Food and beverages were up 4.6% month-on-month (adding to the 4.5% in November), impacted mainly by bread and cereals, dairy, vegetables and meat,” said Allen Sandeep of Naeem Brokerage.

This goes somewhat towards absorbing a 25% devaluation in late October but portends more inflation to come, Sandeep said.

“Now combined monthly inflation has risen by around 7% over three months. This is close to a 30% pass through to the urban CPI index. With the new round of devaluation ongoing, which we expect to be roughly 15%, we can expect annual CPI to touch 25% by February.”

Egypt’s surging prices will add to pressure on the central bank’s Monetary Policy Committee to raise interest rates when it next meets on Feb. 2.

(Reporting by Nadine Awadalla and Patrick Werr; Editing by Jacqueline Wong and Jon Boyle)