Core, annual inflation hit 7-year highs in June

Inflation continued to soar in June, with the annual rates for both core and headline inflation hitting the highest levels since early 2009.

Annual core inflation reached 12.37 percent in June, up from 12.23 percent in May, according to Central Bank of Egypt (CBE) figures released Sunday.

Annual headline consumer price inflation (CPI) — which includes volatile items like fresh vegetables that are not factored into the core index — also hit the highest levels in more than seven years, rising to 13.97, compared to 12.3 percent in May.

The monthly rates for both indices eased compared to spiking monthly rates in May. Monthly core inflation slowed down to an increase of 0.74 percent, compared to 3.15 percent recorded in May. Monthly headline CPI rose by 0.78 percent in June, compared to a 3.05 percent increase in May.

According to the CBE, the combination of high annual inflation paired with relatively low monthly inflation is due partly to unfavorable base effects from the previous year. Annual inflation in June 2015 was relatively low at 11.4 percent, compared to 13.1 percent in May 2015.

Figures released by the state statistics agency CAPMAS show an even more dramatic increase in consumer prices in urban areas.

According to CAPMAS, annual urban consumer inflation rose 14.8 percent in June, up from 12.9 percent in May.

Much of the increase was driven by the food and beverage index, which was up by 18.4 percent year-on-year. The sharpest increase came in vegetable prices, which were up 38.3 percent, while prices for cereals and breads increased by 26.7 percent. Tea prices also rose sharply during the year, up 26.7 percent.

The fastest-growing index was medical care, up by 33.2 percent year-on-year. In the wake of a May increase in prices for cheap drugs, the price of medication and medical products were up by 33.1 percent. Medical care rose even faster, with the cost of outpatient and hospital treatment increasing by more than 40 percent.

In an attempt to control inflation, the Central Bank increased benchmark interest rates by 100 basis points in mid-June, bringing its overnight deposit rate up to 11.75 percent.

The government has also vowed to keep food prices from increasing, launching a variety of initiatives, including army-sponsored outlets promising to sell food at affordable prices during Ramadan.


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