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Annual inflation in Egypt hit a new high in January coupled with currency depreciation, according to the Central Agency for Mobilization and Statistics, leading to increased hardships among people and industry
Annual inflation in Egypt hit a new high in January coupled with currency depreciation, according to the Central Agency for Mobilization and Statistics, leading to increased hardships among people and industry.
Data have shown that annual inflation rose to 26.5% last month from 21.9% in December. In January 2022, inflation stood at just 8%, before soaring after the outbreak of the Russian war in Ukraine. In January, commodity prices continued to rise. The cost of bread and cereals rose to an average of 6.6%, while the price of meat and poultry vaulted by 20.6%.
Egypt’s economy has been hit hard by years of government austerity. Egypt is the world’s largest wheat importer, with most of its imports coming from Eastern Europe. Low-income Egyptian households, who rely on government subsidies for essentials such as bread, meat, etc are hardest hit. Close to 30% of Egyptians live in severe poverty.
In December, Egypt sought a US$ 3 billion bailout loan from the IMF, which was agreed upon by the multilateral body on certain conditions. The IMF loan is tied to Egypt implementing a slew of economic reforms, including adopting a flexible exchange rate. The agreement also includes the possibility of additional funding of US$14 billion for Egypt, if the initial implementation goes well. The value of the Egyptian pound continued to slide upon adopting a flexible exchange rate. The currency has lost around 50% of its value since 2022.
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Egypt is on the path of unveiling economic reforms. The government has already unveiled plans to sell stakes in dozens of state-controlled companies, including banks and energy firms. The IMF and other international aid agencies feel that state-owned undertakings are an obstacle to growth. This coupled with severe shortages of foreign currency is playing havoc on the Egyptian economy.
