Egypt’s annual core inflation rose to 40.3% in May, up from 38.6% in April, reflecting the country’s continuing economic challenges, according to findings from the Central Agency for Public Mobilization and Statistics (CAPMAS). Inflation has surged in Egypt over the past year due to currency devaluations, a prolonged shortage of foreign currency, and import delays. Month-on-month, inflation increased to 2.9% in May from 1.7% in April.
Egypt has devalued its currency by half since March 2022, after the fallout from Russia’s invasion of Ukraine exposed its economic vulnerabilities. In December, Egypt promised to sell state assets worth billions of dollars over the next four years as part of an accord with the International Monetary Fund (IMF). However, the country has made no major sales since the signing, and the central bank has raised its overnight interest rates by 500 basis points.
The IMF’s disbursements to Egypt are subject to eight reviews, the first of which was dated March 15, 2023, according to a staff report published in December. The central bank’s figures come after data from statistics agency CAPMAS showed that Egypt’s annual urban consumer inflation rate in May accelerated to 32.7% from 30.6% in April, approaching an all-time record and higher than analysts had expected. Month-on-month, urban inflation increased to 2.7% from 1.7% in April. The rising inflation is a cause for concern for the Egyptian government, which is struggling to revive the country’s economy and attract foreign investment.
Egypt is trying to counter the elevated demand for the U.S. dollar by accepting new sources of foreign currency such as establishing a company for Egyptian expats to invest their savings in various economic activities in the local market.
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