As per the Central Bank of Egypt, on a year-over-year basis, Egypt’s core inflation dropped to 25.53% in November compared with 30.53% in October.
Core inflation excludes volatile items such as food. Urban consumer prices increased 26% in November compared with 30.8% in the previous month, Nasdaq reported.
The country’s inflation has been on an upward trajectory since last November, when it floated its currency owing to the loan deal with the International Monetary Fund. Other prerequisites for the $12 billion loan were to hike taxes and reduce subsidies.
In order to tackle inflation woes, Egypt’s central bank hiked its key interest rate in early July by 200 basis points to 18.75%. Since November 2016, interest rates have been hiked by 700 basis points.
The central bank drew strong criticism from businesses for its actions, as business leaders showed concerns over stifling growth owing to the rise in borrowing cost. Egypt’s Finance Minister Amr El Garhy expects inflation to fall to 20% by January 2018 and 13-14% by August.
The central bank has set a target of 13% inflation for the fourth quarter of 2018. Economists expect rate cuts in the coming months as post-float inflation woes ease.
Egypt’s current account deficit in the first quarter of fiscal 2017-2018 dropped to $1.6 billion. Moreover, the trade deficit narrowed 5% to $8.9 billion from $9.4 billion as a result of rise in exports. The overall balance of payments surplus increased to $5.1 billion compared with $1.9 billion in the same period a year earlier.
