Egypt's annual headline inflation rose to 32.5 percent in March, up 0.8 percent since February, while the country's monthly price index fell for the second consecutive month, according to state statistics body CAPMAS. The Consumer Price Index (CPI) eased to 2.1 percent in March, compared to 2.7 percent in February and 4.3 percent in January, read CAPMAS' Monday statement. The costs of food and beverages increased year-on-year in March by 43 percent, making them the largest contributers to rising inflation. The CPI has been accelerating since November when the Central Bank of Egypt (CBE) floated the exchange rate, which caused the value of the pound to plummet from EGP 8.8 to an average of 18 per dollar. Egypt, which relies heavily on food imports, has been suffering from an ailing economy and acute foreign currency crisis since the 2011 uprising that overturned long-time president Hosni Mubarak.
The decision to float the Egyptian pound was part of a government economic reform programme begun in 2014. The programme also cut subsidies and imposed new taxes such as the Value-Added Tax, with the aim of reaching a higher growth rate and decreasinf the budget deficit to 9.1 percent of Gross Domestic Product (GDP) in the coming fiscal year 2017/18. The finance ministry has projected the budget deficit to stand at 10.5 percent of GDP by the end of the current fiscal year. Finance minister Amr El-Garhy has said he expects inflation to start falling in November or December of this year. Last week, President Abdel-Fattah El-Sisi met with the director of the International Monetary Fund (IMF) Christine Lagarde, who offered the fund's help to the government and the CBE to bring inflation under control. "We recognise the sacrifices made and the difficulties faced by many Egyptian citizens, especially due to high inflation," the IMF chief said during the meeting in Washington. By end of last month, the monetary policy committee at CBE left its key interest rates unchanged, for the fourth consecutive meeting, keeping its overnight deposit rate at 14.75 percent and its overnight lending rate at 15.75 percent.
