Food prices in Egypt spiked in January after widespread protests disrupted transport and closed down shops, economists said after the state statistics agency released inflation data for the month. The soaring price of food helped spark countrywide protests that shut down much of the economy for more than a week. Urban consumer price inflation, the most closely watched indicator of prices, rose to 10.8 pct year on year in January from 10.3 percent year-on-year in December, CAPMAS said. "Month on month, most indicators were steady, but food prices spiked in January," said Mohamed Rahmy, an economist with Beltone Research. Food prices, which make up 39.9 percent of the urban consumer price inflation basket, rose 2.4 percent in January after falling by 1.9 percent in December and 2.2 percent in November, Rahmy said. Analysts expect a loose fiscal policy and a weaker currency to push inflation even higher in coming months. "Our analysis shows that a 1 percent depreciation in the Egyptian pound versus a 50:50 euro/dollar basket adds approximately 0.3-0.4 percentage points to headline inflation," said Dina Ahmad, CEEMEA strategist at BNP Paribas in London. "Pass-through is therefore quite substantial and would need to be addressed by the central bank either defending the currency or hiking rates," she said before the January figures were released.
