Tuesday, August 19, 2008

Egypt Inflation At 22% In July

Egyptian inflation rose to an annual 22 percent in July, the highest since 1992, putting pressure on the central bank to raise interest rates for a sixth time this year. Urban inflation accelerated from 20.2 percent in June, the Cairo-based Central Agency for Public Mobilization and Statistics said today in a faxed statement. In the month, consumer prices rose 2.2 percent from June. Inflation was 26.1 percent in January 1992, according to the agency.

The central bank raised the benchmark overnight deposit rate for a fifth time this year by 50 basis points to 11 percent on Aug. 8 and said it will ``not hesitate'' to increase it again to combat the highest inflation rate in the Middle East. The Cairo- based bank has raised the deposit rate by 2.25 percentage points this year.

The CASE 30 stock index fell 3 percent to 8,609.39 to a 11- month low today, in the first trading since the central bank raised rates, according to the Web site of the Egyptian Exchange. The index has declined 17 percent this year.

Food and beverage prices rose 3.1 percent in July from the month before, compared with 0.8 percent in June, CAPMAS said. Transport prices increased 1.7 percent in July, it said.

Egypt's parliament approved price increases on May 5 for items including fuel and cigarettes, and boosted taxes on vehicles to fund a 30 percent pay raise for state workers. The salary increases came after three people were killed in riots on April 6 and 7 in the northern textile town of Mahalla El-Kobra, part of a series of protests against the selling of state enterprises, firings and high food prices.

The economy in Egypt, the Arab world's most populous nation, will probably expand 7.1 percent in 2009 compared with 7 percent in 2008, the International Monetary Fund said in its latest report on its Web site.

Emerging markets, including Turkey, Brazil, South Africa and India, have increased interest rates in past months to fight inflation fueled by high global oil and food prices.

Egypt is the world's biggest wheat importer. The country bought 7 million tons of wheat from abroad in the last marketing year, half of its annual consumption, according to U.S. and Egyptian government statistics.

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