In February 2024, Egypt’s annual inflation rate dropped to 12.5 percent from 23.2 percent in January, attributed partly to last year’s higher inflation benchmarks. Despite some economic recovery due to international aid, many households still experience financial strain as costs continue to rise amid ongoing currency depreciation and increasing foreign debt.
In February, Egypt’s annual consumer inflation rate decreased to 12.5 percent, significantly down from 23.2 percent in January, marking a notable recovery from the nation’s severe economic crisis. Economists attribute this reduction partially to a base effect, as last year’s inflation reached an alarming 36 percent. Wael el-Nahas, an economist, stated, “Inflation looks lower because we are comparing it to last year’s extreme price jumps.”
According to the Central Agency for Public Mobilisation and Statistics, the monthly inflation rate for February slightly declined to 1.4 percent, compared to January’s 1.6 percent. The Egyptian economy has faced detrimental effects from a foreign currency shortage leading to severe price hikes, particularly in major urban areas. Following a currency devaluation in March 2024, the country began to stabilize due to a substantial bailout exceeding $50 billion from the IMF, World Bank, and other partners.
Despite a drop in the inflation rate, households have yet to experience financial relief as prices continue to rise. Timothy Kaldas of the Tahrir Institute noted, “People are still seeing their purchasing power diminish. The pace of price hikes has slowed, but the pressure on households remains.” Since February 2022, the Egyptian pound has depreciated over 60 percent, with inflation previously peaking at nearly 40 percent last August.
The government has implemented various reforms to adhere to an IMF agreement, including significant fuel price increases. The IMF board is scheduled for its fourth program review, with expectations to approve a new $1.2 billion loan tranche, alongside plans for an additional loan of about $1 billion. However, Egypt’s foreign debt has surged, reaching $155.2 billion, heavily associated with large infrastructure projects. Meanwhile, regional conflicts, particularly the war in Gaza and disruptions to the Suez Canal, have aggravated the economic situation, with canal revenues dropping over 70 percent last year.
Egypt’s recent inflation figures reflect a significant decrease from prior months, yet the economic crisis continues to impact the populace negatively. While measures are being taken to alleviate the situation, including international financial support and governmental reforms, the ongoing rise in living costs and foreign debt remain substantial concerns. As economic conditions evolve, the pressures on households are expected to linger.
Original Source: www.newarab.com
