The highest reading in two years, January’s annual urban headline inflation above our expectations: Fueled by the unfavorable base-year effect, upward adjustment in some of subsidized food items, in addition to the last cold wave effect on vegetable prices, annual urban headline inflation surged to +7.3% y/y in January 2022 (vs. our expectations of +6.9% y/y) from +5.9% in December 2021. The acceleration in inflation came to reflect the continued increase in both food basket inflation at +12.4% y/y (vs. +8.4% y/y in December) and non-food inflation at +5% y/y (vs. +4.6% y/y in December). The increase in annual food prices was driven by inflation in: (1) bread and cereals (+7.2% y/y vs. +5.5 % y/y in December); (2) dairy and eggs (+12.9% y/y vs. +11.3% y/y in December); (3) vegetables (+17% y/y vs. -6.9% y/y in December); and (4) sugar and related products (+17.7% y/y vs. +5% y/y in December). Non-food inflation also remained on an upward trajectory, driven mainly by the higher contributions of housing and utility baskets and clothing baskets.
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Mona Bedeir
Chief Economist
T +202 3300 5722