Egypt's urban inflation rate drops for fourth consecutive month

Egypt's urban inflation rate decreased for the fourth month in a row in June, dropping to 27.5% from 28.1% in May, according to data released by the country's statistics agency on Wednesday.

The downward trend began in September 2023 when inflation hit a peak of 38%, following the government's adoption of an inflation targeting model and a flexible exchange rate.

Core inflation, which excludes volatile items like fuel and certain food products, also declined to 26.6% year on year from 27.1% in May, as reported by the central bank on the same day.

Economists suggest that efforts to boost local food production in Egypt have been somewhat ineffective, making the country's economy susceptible to external factors.

In June, food and beverage prices rose by 30.8% year-on-year and 3% month-on-month due to a 300% surge in subsidized bread prices starting on June 1.

The increase in bread prices had a limited effect on the overall index since bread makes up only about 1% of the food basket.

This was balanced out by lower prices for other food items and a positive base effect.