Egypt’s annual core inflation falls to 11.59% in March: CBE

CAIRO – 11 April 2018: The Central Bank of Egypt (CBE) said that Egypt’s annual core inflation rate declined to 11.59 percent in March 2018 from 11.88 percent in February 2018, according to a report on Tuesday.

On a monthly basis, core inflation recorded 0.7 percent in March 2018 compared to 0.39 percent in February.

Core inflation discounts or strips out certain categories that are considered more volatile.

The Central Agency for Public Mobilization and Statistics (CAPMAS) announced that annual consumer price inflation slipped to 13.1 percent in March 2018, compared to 32.5 percent in the same month of 2017.

In a Tuesday report, Capital Economics expected that a further decline of the inflation rate would push the Monetary Policy Committee (MPC) to cut interest rates for the third time during its upcoming meeting in May.

The report clarified that, in March 2018, inflation recorded its lowest level since May 2016, meeting the central bank's target range of 13 percent (±3 percent) for the end of this year.

The CBE said in mid-March that it is targeting an inflation rate of 13 percent (±3 percent) in the fourth quarter of 2018, aiming to gradually reach a single-digit rate next year.

The Egyptian government expected inflation to decline by the end of this fiscal year from 17 percent to 13 percent, according to Minister of Finance Amr El-Garhy.

Inflation has increased in Egypt since the flotation of the Egyptian pound in November 2016, reaching a record high level in July 2017 due to energy subsidy cuts, after which it has gradually eased.

Capital Economics expected the overnight deposit rate to reach 13.75 percent by the end of this year, whereas the consensus expects it to fall to 14.25 percent.

The overnight rate and the overnight lending rate are currently at 16.75 percent and 17.75 percent, respectively.

In February, the MPC lowered the interest rates by 1 percent for the first time since the flotation of the Egyptian currency in November 2016, after inflation rates slowed down. The committee again cut the rates by another 1 percent at the end of March.