{"id":545748,"date":"2022-04-11T04:01:23","date_gmt":"2022-04-11T04:01:23","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2022\/04\/11\/inflation-rises-to-near-three-year-high-as-global-food-prices-spike\/"},"modified":"2022-04-11T04:01:23","modified_gmt":"2022-04-11T04:01:23","slug":"inflation-rises-to-near-three-year-high-as-global-food-prices-spike","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2022\/04\/11\/inflation-rises-to-near-three-year-high-as-global-food-prices-spike\/","title":{"rendered":"Inflation rises to near three-year high as global food prices spike"},"content":{"rendered":"

<\/a> Annual urban inflation rose to its highest level in <\/strong>almost three years<\/strong> in March<\/strong> as spillover effects from the conflict in Ukraine continued to hit the Egyptian economy. Figures (pdf)<\/a> released by statistics agency Capmas yesterday showed that inflation accelerated to 10.5% last month from 8.8% in February<\/a>, above the central bank\u2019s 7% (\u00b12%) target range and the quickest rate since May 2019, when the figure stood at 14.1%. Monthly inflation hit a 41-month high of 2.2% (benchmarked against 2.6% in October 2018).<\/p>\n

Inflation was sharper than many analysts had predicted: <\/strong>Analysts were expecting the headline rate to hit around 10%<\/a> during the month.<\/p>\n

Food prices continued to surge:<\/strong> Food price inflation rose at the fastest rate since October 2018 according to a note from Pharos, rising almost to 19.8% y-o-y from 17.6% in February, driven by large price increases in oil, vegetables, sugar, meat and poultry, and bread and cereals. Food and beverages constitute the biggest component of the basket of goods used to measure prices.<\/p>\n

Annual core inflation also rose t<\/strong>o 10.1%<\/strong> from 7.2% in February, its highest since June 2019, according to central bank data (pdf)<\/a>. Core inflation strips out volatile items such as food and fuel.<\/p>\n

Spiraling prices came as Russia\u2019s invasion of Ukraine upended global commodity markets<\/strong>, accelerating inflation that had already set in before the conflict. Global food prices soared<\/a> to an all-time high in March as the war disrupted wheat shipments from Russia and Ukraine, which together provide around a quarter of the world\u2019s wheat supply \u2014 and more than 80% of Egyptian grain imports.<\/p>\n

The Russia-Ukraine war has also driven global risk-off sentiment<\/strong> and triggered outflows from emerging markets. This was compounded by the US Federal Reserve last month hiking interest rates for the first time since 2018.<\/p>\n

The EGP depreciation + Ramadan demand also played a role:<\/strong> \u201cWe attribute the price hike to amplified food demand ahead of the holy month of Ramadan and depreciation by more than 15% on 21 March,\u201d CI Capital\u2019s Sara Saada wrote in a note. The Central Bank of Egypt (CBE) allowed the currency to depreciate<\/a> and hiked interest rates by 100 bps last month in a bid to support inflows.<\/p>\n

Domestic and global realities mean inflation is likely to tick up in April. <\/strong><\/p>\n