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Central Bank of Egypt reveals reasons for high inflation in March 2022 Annual urban inflation jumps to 10.5% in March 2022, marking highest rate since June 2019
Annual headline urban inflation increased to record 10.5% in March 2022 from 8.8% in February 2022, marking the highest rate since June 2019, according to the Central Bank of Egypt. The increase in annual headline inflation is attributed to strong monthly core food and services dynamics in March 2022. This comes as monthly headline urban inflation recorded 2.2% in March 2022 compared to 0.6% in March 2021. Monthly headline urban inflation in March 2022 was strongly driven by higher prices of core food items across the board, reflecting the impact of the Russo-Ukrainian war on the prices of wheat and wheat derivatives, as well as the seasonal impact of Ramadan on the rest of the core food products. Monthly inflation was also strongly driven by higher prices of services, reflecting the return of pilgrimage trips to Saudi Arabia as the Saudi authorities ease their COVID-19 restrictions, and further supported by higher expenditures on restaurants and cafes, which in turn were indirectly impacted by higher prices of food items. Additionally, monthly headline inflation was affected by an increase in the contribution of regulated items, reflecting higher prices of tobacco products. Meanwhile, the prices of volatile food items declined on a monthly basis, while retail items contributed marginally to monthly headline inflation. On an annual basis, the increase in headline inflation during March 2022 was driven by the higher annual contribution of non-food items, as annual non-food inflation increased for the fifth consecutive month to record 6.5% in March 2022 compared to 5.2% in February 2022, which is the highest rate recorded since February 2021. This was further supported by a higher annual contribution of food inflation, continuing an upward trend that started in May 2021 (except November 2021), to record a peak of 19.8% in March 2022, the highest since October 2018. Driven by higher annual contributions of core food and services, annual core inflation increased for the seventh consecutive month, to 10.1% in March 2022 from 7.2% in February 2022, the highest rate since June 2018. This comes as monthly core inflation recorded 3.1% in March 2022 compared to 0.6% in March 2021. Nationwide annual inflation and annual rural inflation increased to record 12.1% and 13.7% in March 2022 from 10.0% and 11.3% in February 2022, respectively. Prices of fresh fruits increased by 2.3%, while prices of fresh vegetables declined by 4.0%. Together, fresh fruits and vegetables declined by 1.9% to contribute by negative 0.10% to monthly headline inflation. Prices of regulated items increased by 0.4%, contributing 0.09% to monthly headline inflation. This was mainly due to higher tobacco prices. Prices of poultry increased, for the third consecutive month, by 8.4%, to contribute by 0.35% to monthly headline inflation. Prices of red meat increased by 4.8% to contribute by 0.20% to monthly headline inflation. Prices of dairy products increased by 4.3%, to contribute by 0.14% to monthly headline inflation. Prices of market rice increased by 14.0%, recording the highest increase since May 2018, to contribute by 0.13% to monthly headline inflation. Prices of fish and seafood increased, for the third consecutive month, by 5.4% to contribute by 0.10% to monthly headline inflation. Prices of eggs increased, for the third consecutive month, by 6.8% to contribute by 0.08% to monthly headline inflation. Prices of unsubsidized bread increased by 12.4% to contribute by 0.08% to monthly headline inflation. Prices of other core food items including pasta, sugar, fats, edible oils, market tea, pulses, among others, increased to contribute by 0.31% to monthly headline inflation. Prices of services increased by 2.1%, to contribute by 0.72% to monthly headline inflation. This was mainly due to the increase in expenditures on restaurants and cafes, in addition to the increased expenditures on pilgrimage trips as the related COVID-19 restrictions are eased by the Saudi authorities. Prices of retail items increased by 0.5%, to contribute by 0.07% to monthly headline inflation. This was mainly due to higher prices of personal care products and household cleaning products. Monthly core inflation was affected by price changes of the aforementioned core CPI items. Core food items contributed by 1.98% to monthly core inflation. Services contributed by 1.02% to monthly core inflation. In addition, Retail items contributed by 0.09%age points to monthly core inflation.
