Egypt inflation climbs first time in 5 months

Bloomberg

Egypt’s inflation rate accelerated for the first time in five months, rising 3.6% in November as the effect of last year’s surge in prices faded but offering the central bank little reason to reverse a monetary easing cycle.
The annual rate for urban inflation rose from 3.1% the month before, the state-run statistics bureau said. Consumer prices fell 0.3% month-on-month from a 1% rise in October — its lowest since June, according to data compiled by Bloomberg. The central bank is due to publish core figures later in the day.
Even with the acceleration, inflation was lower than expected and remains within the central bank’s target range of 9%, plus or minus 3 percentage points, by the end of 2020.
The central bank has cut rates four times this year, reflecting confidence that authorities have brought inflation under control.
“Inflation potentially settles at 6%-7% in December, providing room for the CBE to comfortably cut rates in the first quarter of 2020 by 50-100 basis points,” said Mohamed Abu Basha, head of research at Cairo-based investment bank EFG Hermes.
The central bank will probably hold interest rates at its December 26 meeting to wait for potential acceleration in December or January’s CPI figures, he said. Radwa El-Swaify, head of research at Cairo-based Pharos Holding, sees inflation accelerating to 7% in December, mainly down to the base effect of food prices falling sharply in that month last year.
The easing in the monthly rate was driven by a 4.6% annual drop in food and beverage prices — the largest single component of the inflation basket. On a monthly basis, food fell 1.5%, reflecting efforts by authorities to inject supplies in the market.