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CBE reveals reasons for high inflation in January 2022 Annual urban inflation increases to 7.3% in January 2022 from 5.9% in December2021 , highest rate since August 2019
Egypt's annual urban inflation increased to 7.3% in January 2022 from 5.9% in December2021 , marking the highest rate since August 2019. According to the Central Bank of Egypt (CBE), the increase in annual inflation was predominantly driven by unfavourable base effects in volatile food inflation, as monthly inflation in January 2021 came against its seasonal pattern, mainly as a result of the strongest monthly decline in tomato prices on record. This comes as monthly headline urban inflation recorded 0.9% in January 2022, compared to -0.4% in January 2021. Furthermore, monthly headline urban inflation in January 2022 was mainly driven by seasonally higher prices of core food items, especially poultry, eggs, and market rice. Additionally, the monthly headline inflation reflected higher prices of rationed sugar in accordance with the Ministry of Supply and Internal Trade announcement as well as higher prices of volatile food items. This was further supported by higher prices of non-food items, which mainly reflected an increase in rental values for the third consecutive month and the higher prices of retail items, among others. On an annual basis, the increase in headline inflation during January 2022 was driven by the higher annual contribution of food items and further supported by higher non-food items' contribution. The increase in food items' contribution came as annual food inflation continued with the upward trend that started in May 2021 (except for November 2021) to record 12.4% in January 2022, compared to 8.4% in December 2021, which is the highest recorded rate since May 2019. On the other hand, the increase in non-food items' contribution came as annual non-food inflation increased for the third consecutive month to 5.1% in January 2022 from 4.8% in December 2021. Driven by broad-based higher annual contribution, annual core inflation also increased for the fifth consecutive month to record 6.3% in January 2022 compared to 6.0% in December 2021. This comes as monthly core inflation recorded 0.8% in January 2022 compared to 0.5% in January 2021. Furthermore, the annual headline inflation increased to 8% in January 2022, from 6.5% in December 2021. The rural inflation also jumped from 7.1% to 8.7% in the comparison period. Prices of fresh vegetables also increased by 4.1%, while prices of fresh fruits declined by 1.1%. Together, they contributed by 0.10% to monthly headline inflation. Additionally, prices of poultry increased by 4.0% after declining for two consecutive months to contribute by 0.15% to monthly headline inflation. The prices of eggs increased 5.3% to contribute 0.06% to monthly headline inflation as well. Moreover, the prices of market rice increased by 3.6%, recording the highest increase since December 2018 to contribute by 0.03% to monthly headline inflation. The prices of red meat also increased 0.6% to contribute 0.02% to monthly headline inflation. The prices of Fish and seafood increased 0.7% to contribute 0.01% to monthly headline inflation as well. The prices of other core food items — including dairy products, pasta, pulses, market sugar, fats, and other edible oils — also increased to contribute by 0.09% to monthly headline inflation. Additionally, the prices of regulated items increased 0.7% to contribute 0.17% to monthly headline inflation. This was mainly due to the increase in rationed sugar prices, as announced by the Ministry of Supply and Internal Trade, as well as the increase in tobacco prices. Furthermore, the prices of services increased by 0.4% to contribute by 0.15% to monthly headline inflation. This was mainly due to higher rental values and expenditures on restaurants and cafes. The prices of retail items also increased 0.4% to contribute 0.06% to monthly headline inflation. This was mainly due to higher prices of clothing, household cleaning products, and personal care products. Additionally, monthly core inflation was affected by the price changes of the aforementioned core CPI items. Core food items contributed 0.52% to monthly core inflation. Services also contributed by 0.21% to monthly core inflation, and retail items contributed by 0.08%.
