News / Economy

    Egypt's Urban Inflation Soars, Adds to Risk of Social Unrest

    File - A vendor stands next to his fruit stall as he waits for customers near a mosque in Cairo.
    File - A vendor stands next to his fruit stall as he waits for customers near a mosque in Cairo.
    Reuters
    Egyptian urban consumer inflation soared in November to its highest annual rate in nearly four years, increasing the risk of social unrest and potentially setting up a policy dilemma for the central bank.

    Crippled by political turmoil since a popular uprising toppled autocrat Hosni Mubarak in 2011, Egypt's economy expanded just 2.1 percent in the year to June 30.

    The central bank has cut interest rates three times by a total of 150 basis points since the army deposed Islamist President Mohamed Morsi in July, most recently - and unexpectedly - by 50 basis points at a meeting last week. The bank said then it was more concerned about boosting growth than taming inflation.

    But urban consumer prices rose 13 percent in November year on year, state statistics agency CAPMAS said on Tuesday, the highest rate of increase since January 2010 and well up on October's 10.4 percent.

    Food costs, some of which are already heavily subsidized by the government, contributed to the increase.

    “At the moment, the central bank is stuck, because it's trying to cut the yield on government debt and at the same time help stimulate the economy and keep inflation in check,” said Angus Blair, chairman of business and economic forecasting think-tank Signet. “You've got an economic dilemma, which they have to try and tackle.”

    Spokespeople at the central bank could not immediately be reached for comment on the data, which also showed monthly inflation at 0.9 percent.

    But in a statement accompanying Thursday's rate cut decision, it had acknowledged the possibility of higher inflation, referring to an unfavorable base effect caused by low inflation rates at the end of last year.

    “While upside risks to the inflation outlook continue to moderate as the possibility of a rebound in international food prices is unlikely in light of recent global developments, annual inflation could increase above... current levels in November and December,” it said.

    Egypt's core inflation rate, which strips out subsidized goods and volatile items, including fruit and vegetables, rose to 11.95 percent in the year to November, the central bank said on Tuesday. That's up from 11.15 percent in October.

    Rising food prices

    The price index for urban food and non-alcoholic beverages rose by almost 20 percent annually. For hotels, cafes and restaurants, the price index gained more than 22 percent, CAPMAS data showed.

    “Clearly in a period where there is a restive population, people expect a better standard of living, and it's likely that there will be social repercussions if inflation continues to run at these levels,”  said Blair.

    More than 26 percent of Egyptians live below the poverty line, according to the latest CAPMAS data, and the government is hooked on a subsidy regime under which it spends a fifth of its budget keeping energy and some food prices, including bread, well below market cost.

    The government also has launched a 29.6-billion-Egyptian pound [$4.3 billion] stimulus package, aided by over $12 billion in aid pledged by Arab Gulf countries, since the army ousted Islamist President Mohamed Morsi in July following mass protests against his rule.

    Egyptian Investment Minister Osama Saleh said the government plans to launch a second 24-billion-pound package in January.

    The budget reached a deficit of about 14 percent of GDP in the year to June 30, though Thursday's rate cut promises to ease pressure on government finances, with debt yields having fallen at two auctions since then.

    You May Like

    Native Americans Ask: What About Our Water Supply?

    They say they have been facing a dangerous water contaminant for decades - uranium – but the problem has received far less attention than water contamination by lead in Flint, Michigan

    Pakistan's President Urges Nation Not to Celebrate Valentine's Day

    Mamnoon Hussain criticizes Valentine's Day, which falls on Sunday this year, as a Western import that threatens to undermine the Islamic values of Pakistan

    Mother of IS Supporter: Son Was Peaceful, 'Role Model'

    Somali-American Abdirizak Mohamed Warsame pleaded guilty Thursday to charges of conspiring to provide material support to Islamic State militants

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Two-thirds of World Faces Water Shortagei
    X
    February 12, 2016 7:31 PM
    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Two-thirds of World Faces Water Shortage

    Four billion people — or two out of every three on the planet — do not have enough water to meet their basic needs. That is far greater than previously thought, according to a new study that presents a more accurate picture of the problem. As VOA's Rosanne Skirble reports, the findings will help policymakers and the public craft solutions to address the threat.
    Video

    Video Gateway to Mecca: Historical Old Jeddah

    Local leader Sami Nawar's family has been in the Old City of Jeddah for hundreds of years and takes us on a tour of this ancient route to Mecca, also believed to be the final resting place of Adam's wife, Eve.
    Video

    Video New Technology Aims to Bring Election Transparency to Uganda

    A team of recent graduates from Uganda’s Makerere University has created a mobile application designed to help monitor elections and expose possible rigging. The developers say the app, called E-Poll, will make Uganda's democratic process fairer. From Kampala, VOA's Serginho Roosblad reports.
    Video

    Video As Refugees Perish, Greek Graveyards Fill

    Aid workers on the Greek island of Lesbos say they are struggling to bury the increasing number of bodies of refugees that have been recovered or washed up ashore in recent months.  The graveyards are all full, they say, yet as tens of thousands of people clamor to get out of Syria, it is clear refugees will still be coming in record numbers. For VOA, Hamada Elrasam reports from Lesbos, Greece.
    Video

    Video Russia Bristles at NATO Expansion in E. Europe

    Russian Foreign Minister Sergei Lavrov is meeting Friday with the head of NATO after the Western military alliance and the United States announced plans for the biggest military build-up in Europe since the Cold War. Russia has called NATO's moves a threat to stability in Europe. But NATO says the troop rotations and equipment are aimed at reassuring allies concerned about Russia as VOA's Daniel Schearf reports from Moscow.
    Video

    Video To Fight Zika, Scientists Target Mosquitoes

    Mosquitoes strike again. The Zika virus outbreak is just the latest headline-grabbing epidemic carried by these biting pests, but researchers are fighting back with new ways to control them. VOA's Steve Baragona takes a look.
    Video

    Video Mosul Refugees Talk About Life Under IS

    A top U.S. intelligence official told Congress this week that a planned Iraqi-led operation to re-take the city of Mosul from Islamic State militants is unlikely to take place this year. IS took over the city in June 2014, and for the past year and a half, Mosul residents have been held captive under its rule. VOA's Zana Omar talked to some families who managed to escape. Bronwyn Benito narrates his report.
    Video

    Video Scientists Make Progress Toward Better Diabetes Treatment, Cure

    Scientists at two of the top U.S. universities say they have made significant advances in their quest to find a more efficient treatment for diabetes and eventually a cure. According to the International Diabetes Federation, the disease affects more than 370 million people worldwide. VOA’s George Putic reports.
    Video

    Video NATO to Target Migrant Smugglers

    NATO has announced plans to send warships to the Aegean Sea to target migrant smugglers in the alliance's most direct intervention so far since a wave of people began trying to reach European shores.
    Video

    Video Russia's Catholics, Orthodox Hopeful on Historic Pope-Patriarch Meeting

    Russia's Catholic minority has welcomed an historic first meeting Friday in Cuba between the Pope and the Patriarch of Russia's dominant Orthodox Church. The Orthodox Church split with Rome in 1054 and analysts say politics, both church and state, have been driving the relationship in the centuries since. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Used Books Get a New Life on the Streets of Lagos

    Used booksellers are importing books from abroad and selling them on the streets of Africa's largest city. What‘s popular with readers may surprise you. Chris Stein reports from Lagos.
    Video

    Video After NH Primaries All Eyes on South Carolina

    After Tuesday's primary in New Hampshire, US presidential candidates swiftly turned to the next election coming up in South Carolina. The so-called “first-in-the-South” poll may help further narrow down the field of candidates. Zlatica Hoke reports.
    Video

    Video Smartphone Helps Grow Vegetables

    One day, you may be using your smartphone to grow your vegetables. A Taipei-based company has developed a farm cube — a small, enclosed ecosystem designed to grow plants indoors. The environment inside is automatically adjusted by the cube, but it can also be controlled through an app. VOA's Deborah Block has more on the gardening system.
    Video

    Video Exhibit Turns da Vinci’s Drawings Into Real Objects

    In addition to being a successful artist, Renaissance genius Leonardo da Vinci designed many practical machines, some of which are still in use today, although in different forms. But a number of his projects were never realized — until today. VOA’s George Putic reports.

    World Currencies

    EUR
    USD
    0.8869
    JPY
    USD
    112.70
    GBP
    USD
    0.6894
    CAD
    USD
    1.3922
    INR
    USD
    68.241

    Rates may not be current.