Cairo: Egyptian annual urban consumer inflation in December increased to 21.3 percent from 18.7 percent in November, exceeding analyst expectations, according to CAPMAS data released on Tuesday.
The rate of inflation was the highest since December 2017, when it reached 21.9 percent. The price increases followed a currency devaluation in October and import restrictions.
In a Reuters poll of 15 economists, the median forecast was for inflation to be 20.50 percent. Five economists predict that core inflation, which is due later on Tuesday, will be 23.6 percent, up from 21.5 percent in November.
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On Oct. 27, the central bank allowed the Egyptian pound to depreciate by about 14.5 percent, and it allowed its value to continue to fall gradually and incrementally in November and December.
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"Food and beverages increased 4.6 percent month on month (up from 4.5 percent in November), primarily due to bread and cereals, dairy, vegetables, and meat," said Allen Sandeep of Naeem Brokerage.
This helps to absorb a 25% devaluation in late October, but Sandeep expects more inflation in the future.
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Over the last three months, combined monthly inflation has risen by around 7%. This is nearly a 30% pass-through to the urban CPI index. With a new round of devaluation underway, which we expect to be around 15%, we can expect annual CPI to reach 25% by February."
Egypt's rising prices will put additional pressure on the central bank's Monetary Policy Committee to raise interest rates when it meets next on February 2.