Egypt fuel price hikes fan inflation fears

Hisham Gaber had been preparing his wedding for months, but started to have second thoughts as inflation in Egypt rocketed due to government austerity measures, including sharp increases in fuel prices.

"Marriage and handling the additional burdens in these conditions have become an unsound decision," said the 28-year-old engineer.

The government on Thursday announced an increase in fuel prices of up to 55 percent, the second since November when it also floated the currency in an IMF-backed reform programme, which fuelled inflation.

Analysts believe the fuel price rises will further increase inflation although it was announced to have decreased in May to an annual rate of 30.9 percent, from 32.9 percent the previous month.

"Prices are still rising but not as sharply as before," said Amr Adly, an analyst with the Carnegie Middle East Center.

Radwa El Sweify, an analyst with Pharos Holding for Financial Investments, believes that inflation will spike.

"Inflation over the next two months may rise to 34-36 percent but the rate of inflation in the last two months of this year will be less than the same period last year when the pound was floated," she said.