Inflation hit a fresh all-time high in September as the impact of the foreign-currency shortage and a series of devaluations continued to stoke price pressures. Consumer prices in urban areas accelerated to 38% y-o-y from 37.4% in August, making September the fourth consecutive month of record highs, according to figures released yesterday by state statistics agency Capmas (pdf). Headline inflation has been running above 30% since February.

The figures were higher than expected: The median forecast in a recent Reuters poll of analysts had inflation rising to 37.6%

No surprises as food and drink price rises were once again to blame: Food and beverage prices — the largest components of the basket of goods and services used to calculate inflation — hit a record high of 73.6% y-o-y, up from 71.4% in August. The figure was driven by fruit and vegetable prices, which more than doubled y-o-y.

Monthly inflation figures inched up after three consecutive months of slowing prices:

The past three monthly inflation reports saw the rate of inflation slowing m-o-m, prompting some short-lived optimism about the possible onset of disinflation. September bucked the trend, coming in at 2%, up from 1.6% the month before.

Core inflation continued to slow: Core inflation — which excludes volatile items such as food and fuel — came in at 39.7% y-o-y in September, down from 40.4% the month before, according to central bank data. However, monthly core inflation rose to 1.1% from 0.3% the month before, likely due to seasonal factors like the back-to-school period and an increase in tourism.

Remember: The CBE’s average inflation target is 7% (±2%) by 4Q 2024 and 5% by 4Q 2026. This target has been in place since December 2022.

No relief in sight: Inflationary pressures will likely remain high over the coming 6-9 months due to the anticipated devaluation of the EGP and weakly anchored inflation expectations, economist Hany Genena told Enterprise.

The government is trying to put a lid on rampant food price inflation: The government and private-sector food producers and traders recently agreed to reduce prices of 10 food items by 15-25% from 14 October. The move should help to temporarily ease the rising cost of living on low- and middle-income households, Geneina said.

The international press also has the story: Reuters | The National | Xinhua.

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