Inflation slows to 9.7 percent in January

Annual headline Consumer Price Inflation slowed to 9.66 percent in January, down from 10.13 in December 2014, despite a drop in the value of the Egyptian pound against the dollar that began midway through January. 

According to Egypt’s Central Bank, the slowdown in the yearly rate was driven largely by base effects from January 2014, which saw high inflation.

Meanwhile, the monthly rate ramped up to 0.98 percent, following two months of deceleration in November and December.

Core CPI — which excludes items for which the government sets the price, as well as fruits and vegetables, the prices of which fluctuate frequently — held comparatively stable, with a monthly rate of 0.52 percent and an annual rate of 7.06 percent.

Economists have attributed the relatively low levels of core inflation in recent months to falling global energy and commodity prices, which have kept the cost of imports down and forced local manufacturers to keep prices low in order to compete.

Despite lower global commodity prices, inflation for regulated items, such as gasoline, electricity and tobacco, reached an annual rate of 22.27 percent, the highest level since at least 2008. This category has seen high inflation since July 2014, when the government slashed fuel subsidies, sending prices shooting up overnight. The government has also increased prices of other regulated items, including electricity and tobacco, while shortages in butane cylinders have caused black market prices to skyrocket.

Annual inflation for fruits and vegetables, traditionally a key driver of inflation in Egypt, slowed to 6.73 percent after recording 13.2 percent in December, although the monthly rate accelerated to 1.39 percent after declining in October and November.