Cairo - Egypt's inflation rate declined for a second month in March, giving the central bank more room to keep its benchmark interest rates at a three-year low. Urban inflation, the main rate the central bank monitors, slowed to 12.2 per cent from 12.8 per cent in February, according to the Web site of the Cairo-based Central Agency for Public Mobilization and Statistics. In the month, prices rose 0.7 per cent. “While we expected higher monthly inflation, the magnitude of the monthly change is lower than we expected,” said Reham El-Desoki, senior economist at Cairo-based investment bank Beltone Financial. “We had anticipated that the increase in transportation costs could result in a higher change in prices of food during the month.” The central bank, which meets to decide on rates every six weeks, has kept its key overnight deposit rate at 8.25 per cent for the past four meetings, citing “subdued” inflationary pressures. It cut rates six times in 2009 to help the economy through the global financial crisis, which reduced investment and damped revenue from tourism and fees from the Suez Canal. The bank's next meeting on rates is on May 6.] The cost of food and drinks, which make up more than 45 per cent of the consumer price index, rose 1.4 per cent in the month and 21.3 per cent annually, the agency said. Egypt expects economic growth of 5.2 per cent in the fiscal year through June, compared with 4.7 per cent in the previous fiscal year, Economic Development Minister Osman Mohamed Osman said on March 25. Growth in the construction industry is expected to accelerate to 13.2 per cent in the next fiscal year from 12.5 per cent this one, while agriculture is forecast to expand 3.4 per cent in both years, the Economic Development Ministry said.
