Egypt/ Inflation October 2020 reading
Driven by non-food items, inflation rose further on both monthly and annual bases: Annual urban headline rose for the second consecutive month to 4.5% in October, up from 3.7% in September. Yet, it is still significantly below the Central Bank of Egypt’s (CBE) target range of 9%±3%. On a monthly basis, inflation accelerated further to 1.8% in October, up from +0.3% in September, on the back of the improvement in consumer sentiment, driven by the back-to-school season.
Food prices fell at a slower pace, while non-food baskets agitated the inflation readings: On an annual basis, food prices remained on a deflationary trend y/y for the fourth consecutive month in October, falling at a slower pace (-0.7% vs. -2.6% on September). This slashed the contribution of the F&B basket in the headline figure to -0.2% compared to -0.85% in September. Meanwhile, the contribution of non-food items was notable, mainly the education basket, of which contribution to annual inflation increased to 1.3% in October from 1.1% in September. On a monthly basis, after five months of negative food inflation readings, food prices increased by 0.06% from -0.1% in September. Food prices were driven mainly by the increase in the prices of vegetables (+6.3% in October vs. +1.7% in September) and poultry basket (+0.7% vs. -1.5%). Meanwhile, non-food inflation surged m/m to +3.1% from +0.4%, mainly due to the acceleration in the education basket prices by 1.8% versus a flat reading in September.
Mona Bedeir
Senior Economist
Tel.: +202 3300 5722