Egypt's Inflation Holds Steady in December
According to the Egyptian Statistics Agency, Egypt's annual consumer price inflation rate stood at 21.9% year-on-year in December 2022, unchanged from November. This marks the sixth consecutive month that inflation has hovered around 22%.
Prices for food and beverages rose 26.6% in December, while the housing, water, electricity, and fuels segment increased by 27.4%. In contrast, the communications sector saw a 1.1% decline.
Scope for Further Rate Cuts
This inflation trend supports the Central Bank of Egypt's decision to keep its key interest rates unchanged for the past two months. The central bank had raised the policy rate to 14.25% in November.
However, experts expect the central bank to consider further rate cuts if the stabilization in inflation continues. This is seen as necessary to support the economic recovery.
Outlook for the Egyptian Economy
The stable inflation data points to a recovery in the Egyptian economy. The country's GDP growth rate reached 6.6% last year, and 4-5% growth is expected this year.
Yet, structural issues such as high unemployment and external debt remain unresolved, suggesting that the economic recovery will take time. The impact of the Russia-Ukraine war and supply chain disruptions are also external risks to monitor.
Key Takeaways
- Egypt's annual inflation rate held steady at 21.9% in December 2022
- Food and housing costs continued to rise, but communications prices fell
- The central bank kept interest rates unchanged, but further cuts may be possible if inflation stabilizes
- Egypt's economy is recovering, but structural challenges and external risks persist