Following a dramatic increase in July, headline consumer price inflation continued to climb in August, with a 1.09 percent month-on-month increase. In July, the monthly rate skyrocketed to 3.51 percent.
According to figures from state statistics agency CAPMAS, the annual rate hit 11.49 percent in August, compared to 11.04 percent in July.
Excluding volatile commodities such as fruits and vegetables, and items for which the government sets prices, like fuel and utilities, the Central Bank calculates that monthly core inflation rose by 0.60 percent in August, compared to 1.79 percent in July. The annual core rate hit 10.07 percent in August, accelerating from 9.57 percent in July.
The spike in headline inflation in July was driven by fuel subsidy cuts and increases in tobacco and alcohol prices. In August however, the increase was lead by rising food prices. According to CAPMAS, the food and beverage inflation index recorded an annual increase of 11.6 percent.
In its September 1 press release, the Central Bank’s Monetary Policy Committee noted that rising transportation and food prices can be at least partly attributed to fuel price increases. However, the bank elected to keep key interest rates unchanged, citing the need to balance risks “surrounding the inflation and GDP outlooks.”
Although the loss of spending power hits all consumers, Egypt’s poor are disproportionately affected by food price increases. According to a 2013 study by CAPMAS and the World Food Program, food accounts for 40.6 percent of the expenditure of the average household, and more than half of poor families’ spending. The study also found that when food prices rise, poor households buy cheaper, and often less nutritious foods, contributing to high rates of malnutrition and stunted growth among children.