Controlling inflation INFLATION cannot be contained solely by the Central Bank. It requires the coordination of monetary, fiscal and trade policies, said Rania El-Mashat, assistant sub-governor for monetary policy and head of the monetary policy division at the Central Bank of Egypt (CBE). El-Mashat was addressing a recent seminar organised by the Egyptian Centre for Economic Studies on "Priorities for Monetary Policy: The Scope for Inflation Targeting." Speakers at the seminar had criticised the fact that since 2003 the CBE had said that it targets low rates of inflation but had never announced that it is targeting a specific figure on which it can be held accountable. El-Mashat underlined that low inflation should be a national goal towards which all economic policy-makers should work. It requires a sound fiscal policy, she added. She pointed out that many countries have used inflation targeting to get a grip on their budget deficit. Headline inflation increased by 0.98 per cent month-on-month (m/m) in April compared to 1.22 per cent m/m in March. The annual rate declined to 8.78 per cent in April compared to 9.03 per cent in March. Meanwhile, the core consumer price index (CPI) computed by the Central Bank of Egypt increased by 0.56 per cent m/m in April compared to 1.12 per cent m/m in March. The annual rate declined to 8.36 per cent in April from 8.68 per cent in March. El-Mashat acknowledged that inflation is not only affecting low-income individuals but also the ability of Egyptian products to compete on international markets. She said that in 2011 inflation was characterised by shortages of supply. She added that four products in particular, namely citruses, tomatoes, potatoes and onions, were a main cause behind inflation. Some 20 per cent of the increase in inflation could be eliminated if problems in these crops could be resolved. Milk consumption strong DEMAND on liquid dairy products in Egypt is expected to more than triple, from almost 170 million litres in 2005 to approximately 525 million litres by 2015, according to Amr Youssef, marketing manager at Tetra Pak Egypt, a leading company for food processing and packaging solutions. Youssef was citing recently released figures of the Tetra Pak dairy index. The index provides detailed information on the dairy industry. Demand, according to the index, is fuelled by economic growth, urbanisation and the spending power of millions of middle class consumers. Moreover, the index mentioned that loose milk comprises 76.5 per cent of milk consumption in Egypt, while packed milk consumption is estimated at 23.5 per cent. "In 2009, consumption of packed milk was 16 per cent. The growth rate is satisfying," Youssef told journalists last week. Sherif Abdel-Aal, assistant secretary-general at the Egyptian Paediatric Association, believes that consumption of packed milk should be dominant because loose milk comes usually from unknown sources and is not as safe as packaged milk. Trusting in Egypt EGYPT has not yet lost its appeal as a promising market to many foreign companies. "The level of confidence and trust we have in Egypt and its consumers is very high," Suresh Narayanan, chairman and CEO of Nestlé Egypt this week told a press roundtable. In 2011, Nestlé, the global food and health company, announced that it was investing LE1 billion in Egypt through the coming three to four years. Narayanan is not worried about any economic orientation that Egypt might follow in the coming years as long as foreign companies are not acutely restricted or discriminated against. "If the overall policies towards foreign companies would not change, we would continue investing," he said. However, Narayanan showed concern over the country's current economic fundamentals, citing modest growth rates, dwindling foreign reserves and a decline in the overall confidence of foreign investors. Nonetheless, he underlined the potential of the Egyptian market with its 90 million consumers, adding that his company would continue working and investing in the country. "We can not say no to Egypt."
