Egypt’s inflation rate drops dramatically
Egypt’s inflation rate has dropped dramatically in February as the country carries out vital economic reforms to stabilize the economy.
The National reported on March 10th that the headline inflation rate dropped from 24 percent in January to 12.8 in February, tumbling further than experts had predicated. The fall marks the lowest inflation level the country has seen since March 2022.
Food and beverage prices, the largest single component used to measure inflation, climbed 3.7 percent in February compared to 20.8 percent in January, according to the country’s statistics agency.
Whilst this would usually be surprising as food demand tends to increase before Ramadan, the Egyptian government offset the high prices by increasing supplies of foodstuff at government-organised markets and other government-sponsored outlets.
The supply increase was also accompanied by a media campaign encouraging people to buy their Ramadan wares earlier to get them cheaper.
The ‘spreading out’ of food demand coincides with a series of economic reforms largely driven by international bailouts, most notably the $35 billion Ras El Hekma deal with the United Arab Emirates, a real-estate deal to build a multi-billion dollar city on the north coast of the country.
Egypt also received a subsequent $8 billion financial support package from the International Monetary Fund which came with a set of economic measures designed by the West.
Under the IMF programme, more subsidies will be applied to bread, fuel, diesel, electricity and water which would be implemented in the new fiscal year. He also confirmed that a round of salary increases would also come into effect with the new fiscal year.
External financing has enabled the country to marginally drive up domestic production in a time where business and investor confidence is extremely low, as the country tries to cope with the economic implications of the Gaza war as well as the collapse of the Assad regime in Syria, which has seen large numbers of Syrians flee into neighboring countries.
With a turbulent regional context with the shaky ceasefire in Gaza looking tenuous as Israel continues its aid blockade, along with an unpredictable international arena, particularly in the White House with threats of international tariffs, celebrating the fall in inflation cannot be premature. The country still has a long way to go.
The National, Reuters, Maghrebi
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