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Esraa Ahmed, senior research badyst at Shuaa Securities, Egypt, said the low inflation figures for the second consecutive month add another factor to the likelihood of an upcoming reduction in inflation rates. Interest, probably at the next meeting of the MPC.
Inflation data from the Central Agency for Public Mobilization and Statistics (CAPMAS) showed another surprising figure, after the annual urban inflation fell further by 9.4% in June at 8.7% in July, as the monthly rate accelerated, said the macroeconomic badyst in a research report released today. From -0.8% in June to 1.8%.
She added that inflation in the Czech Republic has the same pattern, falling from 8.9% to 7.8%, with a monthly acceleration of inflation from 1.5% to 1.5% and core inflation. annual rate from 6.4% to 5.9%. 0.27% to 0.11% over the same period.
Low inflation despite financial measures
She pointed out that urban inflation had hit its lowest level in about 47 months, mainly because of rising food and beverage prices – the dynamics of the inflation index in Egypt, she said – remained relatively calm at 0.5% MoM. This reflects the effect of the recent rise in support.
Ahmed pointed out that previous measures to reduce subsidies had resulted in an increase of more than 2% on a monthly basis as a quick and initial response to only food and beverages, showing that the recent monthly increase is very low .
What are the most influential inflationary factors in Egypt ?!
According to Israa Ahmed, the high inflation rates of recent years were the result of several interdependent factors: the pound float and its effects, which spread over the following months, the fiscal adjustment measures and the budget reform, including the reduction of energy subsidies and various fiscal measures; Market efficiency and insufficient price controls, especially during the first few months of the IMF program, have only led to the freezing of the price trend.
The rise of the pound in 2019 has caused the calm of inflation
In light of the above, recent inflation readings show that the first and third factors are the most powerful and in particular believe that the exchange rate is the strongest variable that positively influences the inflation rate. inflation, pointing out that the rise in the pound since early 2019 largely explains a calm inflation What we are seeing now.
The ball is in the camp of the central bank to reduce interest rates
The macroeconomic badyst added that the inflation figures added an additional factor to a set of factors that paved the way for an imminent reduction in interest rates, believing that the current situation was exceptional for the resumption of easing. monetary.
She noted that the real interest rate has reached 7% and that the global market has turned to a monetary easing, especially after the recent reduction of the Federal Reserve and the presence of oil prices in a totally quiet area conducive to budgetary objectives.
1% discount expected at the August meeting
Ahmed pointed out that the timing was particularly timely to reduce interest rates, perhaps not the only one during the current semester, while waiting for the central bank to reduce interest rates. interest of 1% at the next meeting of the Monetary Policy Committee.
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