Egypt Inflation Massive in March

FILE: An employee counts banknotes at a currency exchange shop in the Egyptian capital Cairo on November 3, 2016. - With Egypt's economy in crisis, the currency in freefall and inflation skyrocketing, the poor have been hit hard but the middle class is also strongly affected.

CAIRO - Egypt's headline inflation rate is set to hit an all-time high in March, a Reuters poll showed on Thursday, following a continued shortage of foreign currency after more than a year of devaluations of the Egyptian pound.

The median forecast of 13 analysts polled showed annual urban consumer inflation rising to 33.6% in March from 31.9% in February, which itself was a five-and-a-half-year record.

A median of six of the analysts also expected core inflation, which excludes fuel and some volatile food items, to climb to a record 42.25% from February's 40.26%, also a record.

"We think that earlier falls in the pound will continue to feed through into Egypt's inflation, pushing up both food and non-food inflation," said Capital Economics, which forecast March inflation of 37.1%.

HC Securities said it expected the March figure would reflect increases of up to 11% in petrol prices and 20% in heavy fuel oil prices in early March.

A hike in household electricity last July, a recent liberalization of the prices of essential food commodities such as rice and a local poultry shortage would also boost inflation numbers, HC Securities added.

The previous record, of 32.952%, was reached in July 2017, eight months after Egypt devalued its currency by half as part of a previous, $12 billion IMF support package.

Egypt, which secured a $3 billion financial support package from the International Monetary Fund in December, has devalued its currency by half since March 2022 after fallout from Russia's invasion of Ukraine exposed vulnerabilities in Egypt's economy.

The central bank increased overnight interest rates by 200 basis points on March 30, bringing the deposit rate to 18.25%, to help tame inflation. This brought its total hikes since March 2022 to 1,000 bps.

The state statistics agency CAPMAS is scheduled to release February inflation data on Monday morning.