On Sunday, May 10, Egypt’s official statistics agency CAPMAS announced that the country’s annual urban price inflation rate increased to 5.9 percent in April from 5.1 percent in March. This is a rate higher than analysts had expected on the back of rising food prices.
Although being one of the African countries with the highest number of coronavirus (COVID-19) cases, the African country has not witnessed panic buying seen in other countries. However, the demand for food and other services surged in April, ahead of the Muslim holy month of Ramadam.
Allen Sandeep, head of research at Naeem Brokerage told Reuters that the country expected a surge in Ramadan but the rate of increase is higher than anticipated. “In the two weeks preceding the holy month, there was a lot of buying activity and a demand push across the board. We could possibly see some easing in May,” he said, adding that the increase was still not a cause for concern.
For a while, Egypt has been witnessing a rise in month-on-month urban inflation, which accelerated to 1.3 percent compared with 0.6 percent in March, CAPMAS said. The agency also reported that core inflation, which excludes goods such as food, also increased to 2.54 percent year-on-year in April, from 1.89 percent in March.
Egypt is facing the economic impact from the spread of the new coronavirus. The country has recorded over 9,400 cases of the virus, 2,075 have recovered and 525 died so far.
In curbing the spread of the virus, the country imposed a nightly curfew, closed schools and universities, shut restaurants and cafes, and cancelled flights. The partial lockdown threatens the livelihoods of the country’s 100 million residents, one of three of whom are already living in poverty.
This has also affected the country’s revenue generation and has put a halt on exporting and importing goods and services while taking a drastic toll on the tourism sector which is also a major source of revenue.
Last month, Egypt asked the International Monetary Fund for financial assistance to help deal with the impact of the pandemic on its economy, and is seeking a Stand-By Arrangement (SBA) loan as well as emergency financing under a Rapid Financing Instrument (RFI) loan.
According to analysts and information on the IMF website, Egypt is potentially eligible for as much as $2.78 billion under the RFI and about $4 billion per year under the SBA. Currently, the country’s currency is trading at around 15 Egyptian pounds to a dollar.