Egypt's annual headline urban inflation increased to 5.4% in July 2021, compared to 4.9% in June 2021, mainly affected by unfavorable base effects. This comes as monthly headline urban inflation recorded 0.9% in July 2021, up from 0.4% in July 2020, which reflected the impact of the outbreak of COVID-19 on consumption patterns, especially food items. Monthly headline urban inflation in July 2021 reflected higher prices of regulated items, core food items, and services. The increase in basic items prices mainly reflected higher prices of electricity as announced by the Ministry of Electricity, as well as higher tobacco prices in line with the Health Insurance Law's mandate to increase taxes on tobacco products. On the other hand, prices of volatile food items continued to decline for the second consecutive month, while prices of retail items remained broadly unchanged. On an annual basis, the acceleration of the headline inflation figure during July 2021 was driven by the higher annual inflation of food items and was further supported by the higher annual inflation of nonfood items. Annual food inflation increased for the third consecutive month to reach 4.8% in July 2021 from 3.4% in June 2021, reflecting mainly higher annual contribution of core food items. In addition, annual nonfood inflation increased slightly to 5.7% in July 2021 from 5.6% in June 2021. Driven by the higher annual contribution of core food items, annual core inflation increased in July 2021 to 4.6%, from 3.8% in June 2021. This comes as monthly core inflation recorded 0.6% in July 2021 compared to negative 0.1% in July 2020. Nationwide annual inflation and annual rural inflation increased to record 6.1% and 6.8% in July 2021, from 5.3% and 5.7% in June 2021, respectively. Prices of regulated items increased by 2.3%, contributing 0.54% to the monthly headline inflation. This was mainly due to higher prices of electricity, tobacco products as well as fees for getting official papers. Prices of fresh vegetables slightly increased by 0.4%, while prices of fresh fruits declined for the second consecutive month by 4.1%. Together, fresh vegetables and fresh fruits contributed by negative 0.07percentage points to monthly headline inflation. Prices of eggs increased sharply by 7.7%, to contribute by 0.08% to monthly headline inflation. Prices of poultry increased by 1.5% after declining for two consecutive months, to contribute by 0.06% to monthly headline inflation. Prices of red meat increased for the seventh consecutive month by 0.8%, to contribute by 0.03%age points to monthly headline inflation. Prices of other core food items, including fish and seafood, rice, and oil, increased to contribute by 0.04%age points to monthly headline inflation. Prices of services increased by 0.5%, to contribute by 0.19% to monthly headline inflation. This was mainly due to higher international travel fees, as well as higher prices of haircuts and rental values. Prices of retail items increased slightly by 0.1%, to contribute by 0.01% to monthly headline inflation. The slight increase reflected marginally higher prices of personal care products and household appliances. Monthly core inflation was affected by price changes of the aforementioned core CPI items. Core food items contributed by 0.30% to monthly core inflation. In the meantime, services and retail items contributed by 0.26% and 0.01% to monthly core inflation, respectively.
