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Central Bank of Egypt reveals reasons behind high inflation in September
This comes as monthly headline urban inflation recorded 1.1% in September compared to 0.3% in September 2020. Consequently. While annual headline urban inflation recorded its highest rate of 6% for the first time since January 2020.
Hossam Mounir October 17, 2021 Comments Off

E
gypt’s annual headline urban inflation increased to 6.6% in September 2021 from 5.7% in August, driven by strong monthly dynamics as well as unfavourable base effects.
This comes as monthly headline urban inflation recorded 1.1% in September compared to 0.3% in September 2020. Consequently. While annual headline urban inflation recorded its highest rate of 6% for the first time since January 2020.
According to the Central Bank of Egypt (CBE), the monthly headline urban inflation in September was mainly driven by food items. 
The increase in food prices reflected mainly higher prices of fresh vegetables, specifically tomatoes, and was further supported by higher prices of core food items, mainly poultry and meat. 
Meanwhile, the slight increase in non-food items reflected mainly the effect of an increase in the prices of cafes and restaurants (services) as well as vehicle operating expenses (regulated items), which was partially offset by lower prices of clothing (retail items).
On an annual basis, the acceleration of Egypt’s headline inflation figure during September was, similarly, driven by the higher annual inflation of food items, which was partially offset by lower annual inflation of non-food items.
Annual food inflation increased for the fifth consecutive month to reach 10.6% in September (which is its highest annual rate since May 2019), up from 6.6% in August 2021, reflecting the mainly higher annual contribution of volatile as well as core food items, but by a lesser extent.
This mainly reflected the strong increase of prices in September as well as the muted monthly dynamics in September 2020. 
On the other hand, annual non-food inflation declined for the second consecutive month to record 4.9% in September 2021 from 5.3% in August, driven by broad-based lower annual contributions of regulated, retail and services items.
Driven by the higher annual contribution of core food items, Egypt’s annual core inflation increased in September 2021 to 4.8% from 4.5% in August 2021, the CBE revealed. This comes as monthly core inflation recorded 0.4% in September 2021 compared to 0.1% in September 2020.
Nationwide annual inflation and annual rural inflation increased to 8% and 9.5% in September 2021 from 6.4% and 7.1% in August 2021, respectively.
Prices of fresh vegetables and fresh fruits in Egypt increased by 25% and 1.2%, respectively. Higher prices of fresh vegetables came mainly as prices of tomatoes increased by 88.5%, contributing alone by 0.58 percentage points to monthly headline inflation. Together, fresh vegetables and fresh fruits contributed by 0.83 percentage points to monthly headline inflation.
CBE revealed that prices of poultry increased by 2.8%, contributing by 0.11 percentage points to monthly headline inflation.
Similarly, prices of red meat increased by 1.9%, contributing by 0.08 percentage points to monthly headline inflation.
While eggs prices also increased by 1.7%, contributing by 0.02 percentage points to monthly headline inflation.
Prices of fish and seafood declined by 0.6%, contributing by negative 0.01percentage points to monthly headline inflation.
Meanwhile, prices of other core food items, including dairy products, pulses, rice, oils and fats increased to contribute by 0.05 percentage points to monthly headline inflation. 
Prices of services increased by 0.2%, contributing by 0.06 percentage points to monthly headline inflation.
This was mainly due to higher expenditure on restaurants and cafes as well as higher prices of private hospitals and outpatient services.
Prices of regulated items slightly increased by 0.1%, contributing by 0.03 percentage points to monthly headline inflation. This was mainly due to higher vehicle operating expenses and prices of medical products and inland transportation.
On the other hand, retail items prices slightly declined by 0.1%, contributing by negative 0.01 percentage points to monthly headline inflation.
This was mainly due to lower prices of clothing, according to the CBE.
Monthly core inflation was affected by price changes of the aforementioned core CPI items.
Core food items contributed by 0.34 percentage points to monthly core inflation.
In addition, services items contributed by 0.08 percentage points to monthly core inflation.
On the other hand, retail items contributed by negative 0.01 percentage points to monthly core inflation. 
Topics: CBE Central Bank of Egypt
Hossam Mounir
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