Egyptian inflation Thursday eased for the fourth straight month in May, making it less likely that the central bank will soon raise interest rates. Urban inflation, the main rate monitored by the central bank, slowed to 10.5 per cent from 11.4 per cent in April, according to the website of the Central Agency for Public Mobilization and Statistics. Prices rose 0.5 per cent in the month. The central bank kept its benchmark interest rates unchanged on May 6 for the fifth consecutive meeting, citing “subdued” inflationary pressures. It cut rates six times in 2009 to help the economy through the global financial crisis, which reduced investment and damped revenue from tourism and fees from the Suez Canal. The bank meets again on June 17. “With the commencement of summer holidays and the World Cup matches, which usually lead to higher consumption, we expect the monthly change in headline inflation to rise in the coming months,” said Reham El-Desoki, senior economist at Cairo-based investment bank Beltone Financial. CI Capital, a Cairo-based investment bank, had forecast an inflation rate of 11 per cent. Beltone Financial had expected a rate of 10.7 per cent. The cost of food and drinks, which make up more than 45 per cent of the consumer price index, rose 0.9 per cent in the month and 18.5 per cent annually, the agency said. In its May 6 statement, the central bank said the level of interest rates was appropriate to support economic growth while maintaining price stability in the medium term. Egypt's economy, driven by tourism, manufacturing and construction, expanded at a 5.8 per cent annual rate in the first quarter of 2010, Economic Development Minister Osman Mohamed Osman said in an interview on May 10. The government expects a growth rate of more than 5 per cent in the fiscal year through June, compared with 4.7 per cent the previous year. Egypt's benchmark EGX30 stock index has gained 2.3 per cent this year with Talaat Moustafa Group Holding, the country's largest publicly traded real-estate developer, rising 15 per cent. The Cairo-based company owns four hotels operated by Four Seasons Inc.
