Annual urban headline inflation continued its upward trajectory in August, reaching its highest reading since November 2020. It accelerated to 5.7% y/y in August 2021, up from 5.4% in July 2021. The acceleration was expected, yet it came below our expectation of 6% y/y and the CBE’s mid-point target of 7% ± 2%. The base-year effect and food inflation continued to lead the driving forces behind the rise in the headline reading. Food inflation surged to 6.6% y/y from 4.8% y/y—the highest level in two years. This came against the backdrop of mainly the increase in fruits and vegetables inflation due to the heatwave that weighed on the supply of certain crops. Meanwhile, non-food inflation declined to +5.1% y/y vs. +5.5% y/y in July.
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Mona Bedeir
Chief Economist
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