Annual urban headline inflation came slightly higher in June—as expected—but is still within the targets. In line with our expectations, annual urban headline inflation edged up to 4.9% y/y in June 2021 (the highest annual reading in six months), up from 4.8% in May 2021. Annual inflation is still driven by the surge in food prices and the unfavorable base-year effect, which is expected to continue until later this year. Food inflation recorded its highest level since November 2020, reaching +3.45% y/y, up from +1.75% y/y in May, mainly against the backdrop of an increase in inflation of:
(1) meat and poultry (+3.2% y/y in June vs. -0.8% y/y in May).
(2) dairy and eggs (+4.5% y/y in June vs. +1.7% y/y in May).
(3) oils (+17.5% y/y in June vs. +4.7% y/y in May).
(4) and vegetables (+3.8% y/y in June vs. +2.8% y/y in May).
Meanwhile, non-food inflation slowed to +5.7% y/y in June vs. +6.2% in May, thanks mainly to the fall in the contribution of utilities, medical care, and clothing baskets.
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Mona Bedeir
Chief Economist
T +202 3300 5722