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  • 11-04-23

    Egypt's Inflation Rate Rises to Near All-Time High Amid Currency Devaluations

    (MENAFN) The annual urban consumer inflation rate in Egypt climbed to 32.7 percent year-on-year in March, just shy of an all-time record, according to data from the country's statistics agency CAPMAS. This marks an increase from 31.9 percent in February and follows a series of currency devaluations starting in March 2022, a prolonged shortage of foreign currency, and continuing delays in getting imports into the country.

    Egypt devalued its currency by half since March 2022 after fallout from Russia's invasion of Ukraine exposed vulnerabilities in Egypt's economy. In December, the country secured a $3 billion financial support package from the International Monetary Fund. The median forecast of 13 analysts polled showed annual urban consumer inflation rising to 33.6 percent in March.

    Egypt's highest inflation rate ever was 32.952 percent, reached in July 2017, eight months after the country devalued its currency by half as part of a previous USD12 billion IMF support package. The current surge in inflation is expected to have a significant impact on the country's economy, which is already facing numerous challenges.

    The core inflation rate, which excludes fuel and some volatile food items, is expected to be released later on Monday. The median of the analysts' forecasts expects that to climb to a record 42.25 percent from February's 40.26 percent, the current record. This indicates that the inflation rate in Egypt is likely to remain high in the near future, posing a challenge for the country's policymakers and citizens alike.

    The situation in Egypt is a reminder of the challenges that emerging markets face in managing their economies amid global economic uncertainty and volatility. The country's policymakers will need to take decisive action to address the root causes of inflation and promote economic stability and growth.

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