Egypt’s annual core inflation falls to 11.1% in May: CBE

CAIRO – 11 June 2018: The Central Bank of Egypt (CBE) said that Egypt’s annual core inflation rate declined to 11.1 percent in May 2018 from 11.6 percent in April 2018, according to a report.

On a monthly basis, core inflation recorded 1.5 percent in May 2018, compared to 1.1 percent in April.

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 11.4 percent in May 2018, from 13.1 percent in the previous month.

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 Amrel-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 Monetary Policy Committee of the Central bank of Egypt kept the interest rates unchanged during May’s meeting after lowering them twice earlier this year by 1 percent each time.

On March 29, the committee set the overnight rate and the overnight lending rate at 16.75 percent and 17.75 percent, respectively. In February, the committee 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.