Egypt: CBE explains why annual core inflation declines in March from February’s record level

Egypt: CBE explains why annual core inflation declines in March from February’s record level

Egypt’s annual headline urban inflation increased to 32.7% in March 2023, up from 31.9% in February 2023. Annual headline inflation in March 2023 continued to be primarily driven by higher food prices and supported by higher prices of non-food items. Annual food and non-food inflation continued their upward trend to record 62.9% and 18.3%, respectively.

Monthly headline urban inflation decelerated in March 2023 to record 2.7% down from 6.5% in February 2023. The deceleration was mainly attributed to the significantly slower pace of increase in core food prices compared to the previous two months.

On the other hand, prices of regulated items increased, reflecting higher domestic fuel prices as announced by the Automatic Price Indexation committee on the 2nd of March 2023. In addition, prices of volatile food items increased in line with their seasonal pattern.

Partially impacted by favourable base effects, annual core inflation broke its upward trend that started more than a year ago, to record 39.5% in March 2023, down from 40.3% in February 2023. Monthly core inflation strongly decelerated to record 2.5% in March 2023, compared to 8.1% in February 2023 and 3.1% in March 2022, driven mainly by the recent development in core food prices (mainly poultry, red