Egypt's headline inflation quickens to 4.5% in February

FILE PHOTO: Egyptins buy food in a popular market at Abbdien square in Cairo, Egypt October 20, 2016. REUTERS/Amr Abdallah Dalsh

CAIRO (Reuters) - Egypt’s annual urban consumer price inflation accelerated to 4.5% in February from 4.3% in January, the official statistics agency CAPMAS said on Wednesday.

The increase comes after the headline indicator had fallen for two consecutive months from 5.7% in November 2020.

Month on month, urban inflation was 0.2 percent last month, the agency said.

The increase was due to rises in the prices of tobacco products and utilities.

The overall acceleration came despite a 0.5% year-on-year drop in food and beverage prices, driven by the prices of potatoes, tomatoes, and fish, CAPMAS said.

Egypt’s core inflation, which strips out volatile items like food, was 3.645% in February, little changed from 3.637% in January.

Egypt’s central bank set an inflation target of 5%-9% in December, and kept its key interest rates on hold at its last monetary policy meeting on Feb. 4.

“While there remains sufficient room to accommodate another 100bps cut in policy rates, we expect policy makers, including the Central Bank of Egypt, to be wary of upcoming cost-push inflationary pressures on account of the recent increase in international commodity benchmarks,” including oil and food commodities, said Allen Sandeep, head of research at Naeem Brokerage.

Reporting by Nafisa Eltahir; Editing by Shri Navaratnam and Ana Nicolaci da Costa