Data of the Central Agency for Public Mobilization and Statistics in Egypt showed that the annual inflation of consumer prices in Marsad decreased to 12.5% in February from 23.5% in January, slowly at a faster rate than analysts expected.
A Reuters opinion poll was expected last week and included 15 analysts to decrease the inflation rate to an average of 14.5% in February.
On a monthly basis, prices increased 1.4% in February from January.
Food and beverage prices on an annual basis increased 3.7% after increasing 0.2% from January.
Exchange rate
The head of the Technical Analysis Department in Al -Naeem Holding, Ibrahim Al -Nimr, attributed this decrease mainly to the stability of the exchange rate, adding that the impact caused by the exchange rate changes was limited, contrary to what the past few years witnessed, as well as measures taken by the government and the central bank to control markets.
He added that this decline in the inflation rate may give an outlet for the central bank and help him to think about reducing interest rates, as it gives him the ability to maneuver while approaching the target of the inflation rate of 7%.
Inflation has risen since February 2022 with the start of the Russian -Ukrainian war, which prompted foreign investors to withdraw billions of dollars from the Egyptian Treasury markets.
The basic inflation reached a record increase in September 2023, recording 38%.
A downside path
For his part, the economic researcher and financial market analyst, Samir Raouf, said that inflation is still on its declining course, to support the reduction of interest rates by half a percentage point and a full percentage point, expecting more declines during the next few months of both inflation and interest rate.
Prices have increased due to the reasons, including rapid growth in the cash supply, and the central bank’s data shows that the monetary supply (N2) increased at the highest percentage of 32.1% in the year until the end of January.
A year ago, Egypt reduced the value of the pound sharply and raised interest rates by 600 basis points, and a $ 8 billion financial support package signed with the International Monetary Fund, which contributed to returning financial money to the scope of control.
