Cairo – Mubasher: MubasherTrade Research on Sunday said it forecast Egypt’s annual inflation to decline in the coming months, with the exception of a possible hike in July on the back of the implementation of a 13% to 14% value-added tax (VAT) alongside other financial reforms.
In a new report titled “Inflation in May: Reaching the U-turn”, the research firm said that for the month of May “we can say we already made it to the U-turn, with annual inflation rates decreasing for the first time since October 2016.”
The firm projected annual inflation to drop significantly by November 2017. Until then, modest decreases in inflation rates are expected over the coming months, it said.
“However, this can be interrupted by a potential increase in July 2017 driven by a higher VAT rate and potential fiscal reforms of which schedule is not declared yet,” MubasherTrade Research highlighted.
Data released by the Central Agency for Public Mobilisation and Statistics (CAPMAS) showed a decline in the country’s inflation rate to 30.9% in May from 32.9% in April for the first time since November 2016.
The food and beverages segment logged the highest contribution of 21.95% out of 30.9%, “yet, the pattern of increase in items prices has changed somehow. Recreation and culture took over the top rate increase, recording a YoY change of 46.9%, an unusual rate for the item due to a 74.5% increase in the “organized trips” sub-item,” according to the research note.
In the meantime, monthly inflation continued to decline for the fourth month in a row, falling to 1.6% in May from 1.8% in April. This is mainly attributed to food and beverages (+1.11%) and recreation and culture (+0.56%).
Core CPI calculated by the Central Bank of Egypt (CBE) was also down to 30.57% last month from 32.06% in April.
