Egypt’s headline inflation declined to 21.90 percent in December 2017, from 25.98 percent in November 2017, the Central Bank of Egypt (CBE) said on Wednesday(10-1-2018).
On a monthly basis, Inflation declined by 0.21 percent in December 2017, compared to an increase of 0.97 percent in November.
Core inflation, which strips out volatile items such as food, fell to 19.86 percent in December, from 25.54 percent a month earlier, declining by 0.37 percent month-on-month, the CBE showed.
The significant decline in annual inflation rates in December would encourage the CBE to cut interest rates in February, macroeconomic research consultancy Capital Economics said Wednesday.
The firm’s Middle East analyst Jason Tuvey said in the research note that he expects the Monetary Policy Committee (MPC) will embark on an easing cycle when it next meets in mid-February, adding that interest rates will be cut by 100 basis points (1 percentage point).
He also expected inflation to stand at a single digit by the end of 2018, allowing a further cut in interest rates. Benefiting from the base effect as one year has passed since the flotation of the Egyptian pound, economic analysts expect inflation and interest rates to continue declining over the coming months.
The base effect should be clearer in the upcoming months as the inflation rate for January is expected to be below 20 percent, Minister of Finance Amr el-Garhy told Reuters on Wednesday.
Garhy further anticipated inflation to drop to 13-14 percent by August. Last month, Egypt’s annual urban consumer price inflation fell to 26.7 percent in November from 30.8 percent in October.