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Egypt’s inflation increases into 2023

Central bank interventions have so far been unable to stem the tide of inflation, and Egypt is also contending with the devaluation of the Egyptian pound.
An Egyptian youth is seen working in a bakery at a market, Cairo, Egypt, March 17, 2022.

Inflation in Egypt continued to rise at the end of 2022, the government’s statistics agency announced Tuesday. 

Egypt’s annual headline inflation rose to 21.9% in December, up from 19.2% in November 2022 and 6.5% in December 2021. This was due to prices rising across numerous sectors, including food, water, gas, electricity, housing, health insurance and more, according to the Central Agency for Public Mobilization and Statistics. 

What it means: Headline inflation includes all aspects that could contribute to inflation. It is not adjusted for seasonality or volatile factors such as food or energy. Headline inflation is often considered a good measure of the cost of living.

Why it matters: The rate is the highest since 2017, when annual inflation was 29.5%. Inflation had been mostly declining since then until 2022, according to data from the World Bank. Egypt was particularly hard hit by the supply chain shocks resulting from the Russian invasion of Ukraine. 

The rising inflation is hurting Egyptian consumers. More Egyptians are forced to buy secondhand clothes, for example, Amr Emam reported for Al-Monitor from Cairo last month.

The government and banks have tried a few things to curb inflation. The Central Bank of Egypt raised interest rates last month. Some Egyptian banks also announced saving incentives last week. 

Know more: Egypt is experiencing other fiscal problems as well. Egyptian Prime Minister Mustafa Madbouly announced Monday numerous restrictions on government spending due to Egypt's foreign currency shortage. 

The Egyptian pound has also fallen considerably against the US dollar in recent months, and is currently at an all-time low of around 27.6 pounds to the dollar, according to market data. 

Egypt agreed to float its currency in October 2022 as a precondition for receiving a $3 billion loan from the International Monetary Fund. The pound has fallen considerably since then. 

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