Egypt’s annual urban consumer price inflation for August has risen to 15.5 percent from the 14 percent recorded in July.
Data released by the country’s statistic agency, CAPMAS revealed that consumer prices rose by 1.9 percent in August, the highest level in at least 7 years.
Egypt’s urban consumer price inflation has been rising since April due to several factors including a weak currency and an increase in electricity prices.
The figure however remained unchanged in July giving hope to some economists that the impact of the currency devaluation earlier this year had begun to fade.
The August jump however appears to signal a resumption in the upward trend in prices.
Food and beverage prices, which account for the largest component of the basket of goods and services, climbed 19.3 percent in August compared to the previous year and 1.6 percent in the month, Bloomberg reports.
A senior economist at the Dubai-based investment bank Arqaam Capital, is quoted by Bloomberg as predicting that Egypt’s inflation could rise to as much as 20 percent by the end of the year.
The rise in inflation is coming at a time when Egypt is trying to finalize a $12 billion loan from the International Monetary Fund (IMF) with the government promising to implement a range of economic reforms including spending cuts and the value added tax (VAT) which parliament is yet to approve.
Economists however say the new 13 percent VAT will add as much as 2 percentage points to the country’s headline inflation.
The Egyptian pound which was weakened by the central bank by some 13 percent in March in a bid to attract investments and ease, according to Bloomberg is trading on the black market at a discount of about 30 percent to its official rate against the dollar.