Egypt's inflation rate was probably little changed in June from the previous month, supporting the central bank's policy of keeping interest rates low. Urban inflation, the headline rate that the central bank monitors, probably rose to 10.6 per cent from 10.5 per cent in May, according to the median estimate of six economists surveyed by Bloomberg News. The forecasts ranged from 10.1 per cent and 11.5 percent. The data is due to be released on July 10. The central bank said last month that it believes inflation is subdued enough to justify keeping interest rates unchanged at the lowest level since 2006. The bank cut rates six times in 2009 to support economic growth, which accelerated to 5.8 per cent in the first quarter of 2010 from 5 per cent in the previous three months. “The central bank will intervene if it sees more sustained inflationary pressures from non-food items,” said Reham El- Desoki, senior economist at Egyptian investment bank Beltone Financial, who forecasts inflation at 10.9 per cent. Core inflation, which excludes the costs of fruit and vegetables along with regulated prices, probably accelerated to 6.8 per cent from 6.7 per cent, according to the median estimate of five economists. Some investment banks, including Cairo-based Pharos Holding, said that they expect a rise in food costs because of a June price increase by Juhayna Food Industries, the country's biggest seller of packaged milk. Dairy products account for 6 per cent of the consumer price index, Pharos said in a report this week, forecasting inflation at 11.5 per cent. Other causes of inflation include a higher sales tax on tobacco and cigarettes, and a rise in gas prices for industries that don't use energy intensively. The latter increase is “modest in scope” and won't have a “major impact” on inflation, John Sfakianakis, chief Middle East and North Africa economist at Credit Agricole CIB, said by e-mail. He forecasts a headline rate of 10.1 per cent.
