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CORRECTED-UPDATE 1-Egypt inflation drops further from record high
November 9, 2017 / 12:35 PM / a month ago

CORRECTED-UPDATE 1-Egypt inflation drops further from record high

(Changes “tightening” to “loosening” in lead)

CAIRO, Nov 9 (Reuters) - Egypt’s inflation dipped for the third month in a row in October after hitting a record high on energy price hikes, leaving the central bank on course to begin loosening monetary policy in coming months.

Inflation climbed steadily after the central bank floated the country’s pound in November as part of reforms to secure a $12 billion International Monetary Fund loan, reaching a multi-decade high in July.

After the currency float, Egypt also jacked up interest rates, which many local economists expect to start cutting again in December or January.

Annual urban consumer price inflation eased to 30.8 percent in October from 31.6 percent the previous month, official data showed on Thursday.

Core inflation, which strips out volatile items like food, fell to 30.53 percent from 33.26 percent.

Inflation peaked in July after the government raised fuel prices by up to 50 percent and electricity prices by up to 42 percent in an effort to cut state spending.

Narrowing the budget deficit is part of a raft of economic reforms Egypt has embarked on since it signed the IMF deal to revive its economy, which has struggled since a 2011 uprising drove foreign investors and tourists away.

Egypt has seen its pound lose half of its value since it floated the pound, while the central bank has hiked key interest rates by 700 basis points. (Reporting by Arwa Gaballa and Amina Ismail; Writing by Arwa Gaballa; editing by John Stonestreet)

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