CAIRO (Reuters) -Egypt’s annual headline inflation rate is forecast to have decelerated slightly in June to 16.2% as some food and beverage prices softened, a Reuters poll found.
The median forecast of 15 analysts polled by Reuters was for annual urban consumer inflation to have eased to 16.2% from 16.8% in May. The polling data was collected July 2-7.
“It’s mainly driven by fluctuating food and beverages prices which overall contribute the most to the change in the CPI index reading,” said Amr Elalfy, equity strategist at Thndr Securities Brokerage.
The Egyptian government raised prices on a range of fuel products in April by up to almost 15%, a move long sought by the International Monetary Fund. Egypt has committed to raising fuel prices to cover costs by the end of 2025.
Annual inflation has plunged from a record high of 38% in September 2023, helped by an $8 billion financial support package signed with the IMF in March 2024.
Falling inflation led the Central Bank of Egypt to cut its overnight lending rate by 225 basis points to 26.0% at its April 17 meeting, and by another 100 basis points on May 22.
Inflation is expected to be boosted in July after the government approved a law expanding Egypt’s value-added tax to include more goods and services.
“We expect some inflationary pressures in July as the Egyptian Parliament approved (last week) some amendments to the Value Added Tax (VAT) Law for some businesses, including cigarettes and tobacco,” said Heba Monir of HC Securities.
“Cigarette prices are expected to increase by c.16% within days besides a potential increase in electricity prices due to higher natural gas prices.”
(Reporting by Patrick Werr; Editing by Susan Fenton)
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