Egypt’s rising prices dampen hopes for growth

Egyptian prices continued their upwards path this month, driven by the government’s cuts to fuel subsidies, and raising the spectre of a long period of low growth and high inflation.

The price rises threaten to filter through to living standards, and to reduce the attractiveness of government debt, which many Egyptian retail banks have significant holdings of.

Two key price indices rose half a per cent each, as the end of fuel subsidies pushed up the price of transport.

Overall inflation rose to 11.5 per cent from 11 per cent, while core inflation, which excludes the fruit and vegetables and regulated prices, rose to 10.07 per cent from 9.57 per cent, according to data released by Egypt’s Central Bank.

The price of transport, which rose 28.1 per cent year on year, was the biggest contributor to inflation.

This follows the ending of subsidies on a number of energy prices that has resulted in petrol prices increasing by as much as 77 per cent.