In February, Egypt’s inflation rate fell to 12.5%, down from 23.2% in January, indicating easing economic conditions. However, purchasing power remains low for citizens, with ongoing pressures from rising prices and substantial foreign debt. The IMF is set to review its support, with a new loan tranche expected.
In February, Egypt’s annual consumer inflation rate decreased to 12.5 percent, as reported by official figures on Monday. This decline marks a significant reduction from January’s inflation rate of 23.2 percent, attributed largely to a base effect arising from last year’s extreme price surges. Wael el-Nahas, an economist, noted, “Inflation looks lower because we are comparing it to last year’s extreme price jumps.”
The Central Agency for Public Mobilisation and Statistics highlighted that the monthly consumer inflation rate in February was slightly lower at 1.4 percent, down from 1.6 percent in January. The economic situation had deteriorated early last year due to a foreign currency shortage, leading to a crisis in Egypt’s import-dependent economy and daily increases in consumer goods prices.
Following a currency devaluation in March 2024, Egypt showed signs of recovery, fueled by over $50 billion in loans and investment agreements from the International Monetary Fund (IMF), the World Bank, and the United Arab Emirates. Nevertheless, household relief remains elusive, with Timothy Kaldas from the Tahrir Institute commenting, “People are still seeing their purchasing power diminish.”
Since February 2022, the Egyptian pound has lost more than 60 percent of its value, with inflation reaching nearly 40 percent in August 2023. The Egyptian government has implemented several stringent reforms to align with an IMF agreement that increased from $3 billion to $8 billion last year, including three fuel price hikes in 2024.
The IMF board is set to meet for its fourth program review, expected to approve a new $1.2 billion loan tranche. Despite these measures, Egypt’s foreign debt has surged to $155.2 billion by September 2024, largely due to extensive infrastructure projects. Furthermore, the economic impact of the ongoing conflict in Gaza has exacerbated challenges, including disruptions in the Suez Canal, which witnessed a revenue decline of over 70 percent last year.
In summary, Egypt’s inflation rate has significantly decreased to 12.5 percent in February, reflecting improvements in the economy following recent reforms and international support. However, the country continues to grapple with diminishing purchasing power among its citizens and escalating foreign debt. As Egypt navigates these complexities, further assistance and strategic management are essential for sustainable recovery.
Original Source: www.newarab.com
