Egypt's Annual Inflation Slows to 14.9% in April
Egypt's annual urban consumer inflation slowed unexpectedly to 14.9 percent in April, easing concerns over rising prices amid geopolitical tensions and economic instability.
Riyadh: Egypt's annual urban consumer inflation unexpectedly slowed to 14.9 percent in April from 15.2 percent in March, as reported by the country's statistics agency, CAPMAS.
This unexpected downturn comes despite ongoing geopolitical tensions, which have driven up electricity prices, weakened the Egyptian currency, and pushed higher commodity costs, particularly for poultry.
The easing inflation rate stands in contrast to Egypt's record peak of 38 percent in September 2023, supported partly by an $8 billion financial assistance package from the International Monetary Fund (IMF) in March 2024.
However, recent government decisions may reignite inflationary pressures.
On May 3, the government raised natural gas prices for several energy-intensive industries, which could intensify price hikes in May.
Separately, central bank data revealed a significant decline in Egypt's net foreign assets, dropping by $6.07 billion in March to $21.34 billion.
This monthly decline is the most substantial since the conflict with Iran escalated.
The decrease occurred during the first full month following US and Israeli strikes against Iran, which increased energy import costs, diminished tourism revenues, and triggered billions of dollars in portfolio investment outflows as foreign investors retreated from emerging markets amid heightened geopolitical uncertainty.
The March decline followed a $2.12 billion drop in February, when net foreign assets plummeted from a record high of $29.54 billion at the end of January.
The acceleration of capital outflows came after US and Israeli airstrikes against Iran in late February.
According to Reuters calculations based on central bank figures, commercial banks' foreign assets decreased by approximately $3.59 billion in March, while the central bank's foreign assets fell by $697 million.
At the same time, net foreign liabilities increased across both commercial lenders and the central bank.
Egypt's net foreign assets, combining holdings at the central bank and commercial banks, first turned negative in February 2022 as authorities intervened to support the Egyptian pound against the US dollar.
The position returned to positive territory only in May 2024, following a sharp currency devaluation implemented two months earlier.
Additionally, Egypt's M2 money supply expanded by 20 percent year on year in March, according to central bank data released on Thursday.
The money supply increased to 15 trillion Egyptian pounds ($285 billion), up from 12.5 trillion pounds in the same month a year earlier.
This unexpected downturn comes despite ongoing geopolitical tensions, which have driven up electricity prices, weakened the Egyptian currency, and pushed higher commodity costs, particularly for poultry.
The easing inflation rate stands in contrast to Egypt's record peak of 38 percent in September 2023, supported partly by an $8 billion financial assistance package from the International Monetary Fund (IMF) in March 2024.
However, recent government decisions may reignite inflationary pressures.
On May 3, the government raised natural gas prices for several energy-intensive industries, which could intensify price hikes in May.
Separately, central bank data revealed a significant decline in Egypt's net foreign assets, dropping by $6.07 billion in March to $21.34 billion.
This monthly decline is the most substantial since the conflict with Iran escalated.
The decrease occurred during the first full month following US and Israeli strikes against Iran, which increased energy import costs, diminished tourism revenues, and triggered billions of dollars in portfolio investment outflows as foreign investors retreated from emerging markets amid heightened geopolitical uncertainty.
The March decline followed a $2.12 billion drop in February, when net foreign assets plummeted from a record high of $29.54 billion at the end of January.
The acceleration of capital outflows came after US and Israeli airstrikes against Iran in late February.
According to Reuters calculations based on central bank figures, commercial banks' foreign assets decreased by approximately $3.59 billion in March, while the central bank's foreign assets fell by $697 million.
At the same time, net foreign liabilities increased across both commercial lenders and the central bank.
Egypt's net foreign assets, combining holdings at the central bank and commercial banks, first turned negative in February 2022 as authorities intervened to support the Egyptian pound against the US dollar.
The position returned to positive territory only in May 2024, following a sharp currency devaluation implemented two months earlier.
Additionally, Egypt's M2 money supply expanded by 20 percent year on year in March, according to central bank data released on Thursday.
The money supply increased to 15 trillion Egyptian pounds ($285 billion), up from 12.5 trillion pounds in the same month a year earlier.
