Inflation rises again in April to sit at 13.9%

Annual headline urban inflation rose for the second month running in April to hit 13.9%, marking 0.3 percentage point increase from the 13.6% recorded in March, according to data from state statistics agency Capmas. On a monthly basis, inflation eased by 0.3 percentage points to 1.3%.

Driving the trend: Food and beverage price inflation, the largest component of the basket of goods and services used to calculate headline inflation, fell 0.6 percentage points to 6.0% in April.

Largely in line with expectations: The inflation reading came in line with forecasts set by experts we spoke to, who saw the figure coming in at 13.4-13.9% as rising energy prices keep the figure elevated. Banking expert Hany Abou El Fotouh cited “recent fuel price hikes and the demand pressure during holiday season,” while HC Securities’ Heba Mounir cited “the favourable base year effect and increasing energy prices.” Meanwhile, Thndr Securities Brokerage’s Chief Equity Strategist Amr El Alfy was more optimistic, predicting the annual figure to come in at 13.4%.

REMEMBER- The Oil Ministry’s fuel pricing committee raised fuel prices by 11.8-14.8% last month, in what was the government’s first fuel price hike since October 2024. Analysts we spoke to last month all agreed that the price hike will add to inflationary pressures — and even push up the headline figure.

What about core inflation? The central bank should release the figure for core inflation later today.

So, what does this mean for interest rates? “The central bank can make a number of decisions when its Monetary Policy Committee (MPC) meets in May without jeopardizing monetary and financial stability, given the widening gap between interest rates and inflation,” Ahly Pharos head of research Hany Genena told EnterpriseAM. “I don’t see the point in postponing the two percentage point rate cut, seeing as inflation will remain close to its current levels until the end of the year.”

ICYMI- Supported by cooling inflation in the first quarter of 2025, the CBE’s MPC cut interestrates by 225 bps in its second meeting of the year last month, in what was the first change to the policy rates since March 2024, following seven consecutive meetings where rates were held steady. It is also the bank’s first rate cut since November 2020.

The news received attention from: Reuters | The National.