CAIRO: Egypt’s annual urban consumer price inflation hit a three-decade high in April, adding pressure on the government to lower prices before the holy month of Ramadan begins at the end of the month.
Food demand usually grows during Ramadan because of heavy consumption following the dawn-to-dusk fasting. Ramadan begins on May 27.
Annual urban inflation rose in April to 31.5 percent from 30.9 percent in March, the official statistics agency, Central Agency for Public Mobilization and Statistics (CAPMAS), said on Wednesday. The figures are the highest since June 30, 1986, when it reached 35.1 percent, according to Reuters data.
President Abdel Fattah El-Sisi is under increasing pressure to revive the economy, keep prices under control and create jobs to avoid a backlash from the public.
Import-dependent Egypt abandoned its currency peg to the US dollar on Nov. 3 and since then the currency has depreciated roughly by half, causing prices of goods to soar.
Floating the pound helped Egypt secure a $12 billion International Monetary Fund (IMF) loan to support the country’s economic reforms, which include subsidy cuts and introducing a value-added tax (VAT).
An IMF delegation is in Cairo to review Egypt’s progress with the reforms, a condition for disbursing the second installment of the loan program.
Jihad Azour, the new head of the IMF’s Middle East department, said earlier this month that lowering inflation is key to keeping the country’s economic reform program on track.
Egypt’s central bank raised interest rates 3 percent when it floated the pound in November, in an effort to fight price pressures. But inflation is expected to keep rising as the government pushes on with more economic reforms.
The central bank left rates unchanged at its last four monetary policy meetings, but bankers and economists say more rate increases are likely as inflationary pressures rise with the implementation of reforms.
The central bank’s monetary policy committee is due to meet on May 21 to discuss interest rates.