Egypt Inflation Hit 29.6% In January: Food Prices Up, Tourism Down

Written by Dana Sanchez

Egypt’s annual inflation rate hit 29.6 percent in January, three months after the government floated the pound in line with an International Monetary Fund bailout, official figures showed Saturday.

Prices rose even faster than in December, when inflation stood at 24.3 percent —  the highest level since January 2011 when the Arab Spring uprising was at its height.

The tourism sector, one the main sources of foreign currency, has been hit hard by a persistent jihadist insurgency, AFP reported.

The number of tourists visiting Egypt in 2016 was 5.3 million, compared to 9.3 million tourists in 2015. This decline is attributed to the suspension of Russian and British flights following the Metrojet flight which crashed in October 2015, Daily News Egypt reported.

Investigators in Egypt have yet to give the results of their inquiry into the loss of the MetroJet A321 over Sinai on Oct. 31, 2015, according to a Feb. 7 Flight Global report. Russian analysts say the aircraft was brought down deliberately. Investigators have not confirmed sabotage.

From AFP, as reported in Gulf News.

Consumers have been hit by surging prices since November when the government floated the currency and slashed fuel subsidies as part of an economic reform package linked to the $12 billion IMF loan deal.

The Egyptian pound, which had been pegged at 8.83 to the dollar, has been trading at nearly 19.

Food prices have gone up even more than other goods, rising by 38.6 percent year on year.

IMF mission chief Chris Jarvis said last month that he expected inflation to ease significantly in the second half of the year.

He said Egypt had made a “good start” on the reform package it had signed up to.

In addition to the pound’s devaluation, the government also raised tariffs on hundreds of imported items to up to 60 percent in December and introduced a value-added tax in September.

The IMF approved a first $2.75 billion tranche of emergency loans in November after Egypt’s foreign currency reserves plunged.

Egypt is set to receive a second tranche of $1.25 billion.

Read more at Gulf News.