Inflation hits a one-year low: Inflation eased for the fourth consecutive month in January to reach its lowest level in a year on the back of a continued deceleration in food price increases. Figures published last week by state statistics agency Capmas showed that annual inflation in urban areas slowed to 29.8% in January from 33.7% in December.

Monthly Inflation, however, inched up again in January to 1.6%, compared to 1.4% the month before.

Core Inflation falls: Annual core inflation — which excludes volatile items such as food and fuel — fell to 29% in January, down from 34.2% in December, according to central bank figures. Meanwhile, monthly core inflation accelerated to 2.2% from 1.3% in December.

A decline in food prices is still leading the trend: Food and beverage price growth — the largest component of the basket of goods and services — slowed to 47.9% y-o-y in January from 60.5% in December.

A favorable base effect is still at work, as the rapid rise in inflation at the end of 2022 and the first half of 2023 will help ease annual figures over the coming months. It is yet to be determined, however, whether this would offset the inflationary pressures expected should the CBE go ahead with a currency devaluation.

Inflation dropped more than expected: January’s inflation figures came below a median of 32.5% that was projected by analysts polled byReuters. Inflation has been on a downward track since a never-seen-before 38% recorded in September, though analysts have warned of uncertainty in the inflation outlook ahead of the anticipated currency devaluation and recent price hikes by the government.

Still a long shot from gov’t inflation targets for FY 2024-2025: The Madbouly government wants to see annual headline inflation fall to an average of 15% in the coming fiscal year, which is significantly below the estimated 38% for the current year. The central bank’s average inflation target is 7% (±2%) by 4Q 2024.

The international press also took note: Reuters | Bloomberg.

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