Inflation down INFLATION rates unexpectedly declined in May to 11.9 per cent compared to 12.1 per cent in April, according to the Central Agency for Public Mobilisation and Statistics (CAPMAS). The decrease came on the back of a retreat in food price increases to 19.8 per cent compared to 21.7 per cent in the previous month. Moreover, core inflation, the rate calculated by the Central bank of Egypt (CBE), increased by 0.54 per cent in May following an 0.85 per cent increase in April. The meager levels of private spending curbed inflation figures despite the 36 per cent increase in oil prices and the shortage in diesel and butane gas cylinders. This restrained spending will partially offset risks of high inflation and supports the CBE Monetary Policy Committee (MPC), decisions to hold interest rates steady to encourage investments and push up growth rates. In its meeting held on 9 June, MPC decided to keep the overnight deposit and lending rates unchanged at 8.25 per cent and 9.75 per cent. This the 14th time the CBE decides to keep the rates unchanged. According to CI Capital, Investment saw a retrenchment of 26 per cent on the third quarter of 2011-2012. Real GDP growth contracted by 4.2 per cent in the third quarter marking the first negative year on year growth since 2001-2002. This came on the back of a significant decline in the tourism, manufacturing and construction sectors. Last month, Samir Radwan, minister of finance, noted that the economy shrank by seven per cent in the third quarter compared to the previous one. This, said CI Capital, with the release of annual growth rates will imply a double-digit drop on a quarterly basis. Sharaf's African agenda DURING the second summit of the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and the African Community (EAC) held this week in Johannesburg, Egypt made it clear that activating relations with Africa is on top of its agenda. Prime Minister Essam Sharaf, who led the country's delegation at the meeting, said that post-revolution Egypt is keen to give priority to boosting relations with African countries in the political, economic, social and cultural domains. During the meeting, southern and eastern African countries that account for more than half the continent's population and GDP took a step towards a free trade agreement that is as much about development as opening borders and dropping tariffs. On Sunday 12 June, 26 governments decided to set timetables for allowing people and goods to move freely from Egypt down to South Africa, and from Angola across to Madagascar. The proposed free trade block which will include the three big groupings is to open new cooperation horizons in the fields of trade and industry among African states, and also to encourage the establishment of joint investment projects for the sake of achieving sustainable development among African countries. Moreover, Egypt is trying to activate with South Africa an initiative for the formation of the biggest free trade block in the continent aimed at creating regional integration and boosting Africa's role in the global economy. Egypt offered to host the third summit of the Common Market for Eastern and Southern African Development Community (SADC) and the African community (EAC). The offer came during the opening speech by Sharaf before the second COMESA, SADC, and EAC summit in Johannesburg, South Africa. During the summit, African leaders tried to push forward infrastructure development and projects to support industry and manufacturing in the region, with the hope of turning local entrepreneurs into regional powerhouses and attracting foreign investment. The African countries are in urgent need to cooperate and boost trade relations. According to World Bank figures, trade among countries in sub-Saharan Africa accounts for just 10 per cent of total trade, compared to 60 per cent within Europe, 40 per cent within North America and 30 per cent within Asia.
