Rising Inflation in Egypt: October 2024 Update
In October 2024, Egypt's urban consumer price inflation rate increased to 26.5%, up from 26.4% in September, as reported by the Central Agency for Public Mobilization and Statistics. The annual inflation rate for the country also saw a rise, reaching 26.3%, compared to 26% the previous month. This surge in inflation is largely attributed to significant price hikes in various sectors, particularly in cultural and entertainment goods and services, which skyrocketed by 48.2%. Additionally, healthcare costs rose by 31.3%, and transportation services experienced a 30.2% increase.
Economic Context and IMF Review
The rise in inflation occurs as Egypt is undergoing the fourth review of its IMF loan program, which is crucial for disbursing a $1.2 billion loan to support the nation’s struggling economy. This program has already provided over $800 million in financing through previous reviews. Amidst this economic turmoil, Prime Minister Mostafa Madbouly assured the public that there would be no new burdens in terms of fuel and service price increases, despite a recent decision to raise fuel prices by up to 17.5%, which has led to widespread discontent.
The government has indicated that further fuel price adjustments may be necessary under the IMF's economic reform program, potentially every six months. Additionally, there are concerns regarding a possible flotation of the Egyptian pound, which has already depreciated significantly in value. Madbouly emphasized that while the IMF recognizes Egypt's flexible exchange rate system, there will not be a true flotation, and currency values will fluctuate based on market conditions. With external debts nearing $165 billion, Egypt faces one of its most severe economic crises, exacerbated by rising inflation and increasing financial aid needs.
