Annual Inflation in Egypt Hits Record High
Annual inflation in Egypt rose to a new record in August, official data showed Sunday, as the cash-strapped country continues to battle price hikes and a depreciating currency.
Inflation Rate Reaches 39.7%
The annual inflation rate reached 39.7% last month, up from the previous record of 38.2% registered in July, according to data released by the state-run Central Agency for Mobilization and Statistics.
Monthly Price Growth
On a monthly basis, prices grew 1.6% last month, down from a prior 1.9% rise in July.
Prices in Egypt rose across many sectors, from food items and medical services to housing and furniture following the Russia-Ukraine war, which unleashed a wave of inflation across the globe.
Surge in Food Prices
The figures released Sunday morning showed that food prices, the main drivers of inflation, rose by over 70% in August compared to the same month last year. Grains, meat, poultry, fish, and fruit were among the products with the biggest price spikes.
The inflation rate in August more than doubled compared to the same month last year, when it recorded 15.3%. Economic pressures, shortage of foreign currency and successive devaluation of the local currency compound the surge.
The Egyptian pound lost over 50% of its value against the dollar since the Russian war on Ukraine broke out in Feb. 2022. This has added further burdens on millions of Egyptians, who found their savings running low as the cost of living surged.
Investors pulled billions out of Cairo’s foreign reserves, which remain buoyed by deposits from wealthy Gulf allies whose promises to purchase Egyptian state assets have fallen short of government targets.
Poverty and Dependency
Even before the current crisis, 30% of Egyptians were living below the poverty line, according to the World Bank, with another 30% vulnerable to falling into poverty.
Egypt, the most populous Arab country with over 105 million people, is the world’s largest wheat importer. Most of its imports traditionally come from Ukraine and Russia.
Egypt has been dependent on bailouts in recent years, from both Gulf allies and the International Monetary Fund (IMF).
Last year, the IMF approved a $3 billion loan for Egypt conditioned on “a permanent shift to a flexible exchange rate regime.”
The country’s external debt bill has tripled over the past decade, rising to a record high of $165.4 billion this year, according to the Ministry of Planning figures.
