Egyptian headline inflation rises as food costs jump

Egypt's annual urban consumer price inflation jumped to 14.1% in May from 13% in April, official statistics showed on Monday, a rise analyst said was greater than expected and prompted by increasing demand for food products.

Prices for food and non-alcoholic beverages rose 15.1%, up from 13%, the state statistics agency CAPMAS said. Overall month-on-month inflation accelerated to 1.1% from 0.5%. Egypt is nearing the end of an IMF-backed economic reform programme during which inflation rose as high as 33% in 2017. Inflation later cooled but rising food prices, especially for fruits and vegetables, have kept pressure high.

"The figures are higher than expected, whether on a monthly or yearly basis," said Radwa El-Swaify, head of research at Pharos Securities Brokerage. "Food and drinks are the main reason for the increase." Naeem Brokerage said in a research note that the increase mostly reflected rising demand including higher consumption of food products ahead of the Eid holiday at the start of June.

Core inflation, which strips out volatile items such as food, slowed slightly to 7.8% in May from 8.1% in April, the central bank reported on Monday. High inflation has placed Egyptians, millions of whom live below the poverty line, under increasing economic strain. The government and the military have occasionally intervened by providing food products below market prices.

As part of the IMF deal, Egypt is due to phase out remaining subsidies on most fuel products this month, a step that could add to inflationary pressures.