Egypt’s annual headline urban inflation declines to 4.1% in April 2021: CBE

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Egypt’s annual headline urban inflation decreased to 4.1% in April from 4.5% in March and February 2021.

This comes as monthly headline urban inflation registered 0.9% in April 2021, compared to 1.3% in April 2020.

The monthly headline urban inflation in April 2021 reflected its normal seasonal pattern as well as the seasonal effect of Ramadan. The seasonal increase in food prices was driven by broadly equal contributions of both volatile and core food items for the second consecutive month, albeit with a slightly higher magnitude recorded in the contribution of core food items.

Higher core food prices were mainly driven by seasonally higher poultry prices, while higher volatile food prices reflected broad-based increases in fresh vegetable prices, as prices of fresh fruits declined against their seasonal pattern.

On the other hand, non-food prices increased, mainly reflecting seasonally higher prices of clothing items and higher driving licence renewal fees.

Accordingly, annual headline inflation decelerated in April 2021 on the back of the lower annual inflation of food items. Annual food inflation declined back to negative territory and registered -0.3% in April 2021, from 1.0% in March 2021, and compared to -0.5% recorded in January and February 2021.

The decline was driven by the lower annual contributions of volatile food and core food items. Meanwhile, annual non-food inflation increased slightly to 6.1% in April 2021, from 6.0% in March 2021, and compared to 6.6% in February 2021.

The slight increase was driven by the higher contribution of regulated items, which was partly offset by the lower contribution of services items.

Against this background, monthly core inflation recorded 0.7% in April 2021, compared to 1.0% in April 2020. Accordingly, annual core inflation declined to 3.3% in April 2021 from 3.7% in March 2021.

Nationwide annual inflation and annual rural inflation declined to record 4.4% and 4.7% in April 2021, from 4.8% and 5.2% in March 2021, respectively.

Prices of fresh vegetables increased by 12.0% for the second consecutive month, whilst prices of fresh fruits declined by 1.5%. The increase in fresh vegetable prices marked the strongest increase registered in the month of April historically since 2007.

Together, fresh vegetables and fresh fruits contributed 0.31% to monthly headline inflation.

Prices of poultry increased by 7.5% for the fifth consecutive month, to contribute by 0.29% to monthly headline inflation. Meanwhile, prices of red meat increased for the fourth consecutive month by 0.8%, to contribute by 0.03% to monthly headline inflation.

Prices of fish and seafood increased slightly, by 0.6%, after two consecutive months of declines, to contribute by 0.01% to monthly headline inflation.

Prices of other core food items, including milk, eggs, cheese, pasta, and oils, increased to contribute by 0.04% to monthly headline inflation. Prices of regulated items increased by 0.42%, to contribute by 0.1 percentage points to monthly headline inflation. This was due to higher driving licence renewal fees.

Prices of retail items increased by 0.6%, to contribute by 0.08% to monthly headline inflation. This was mainly due to seasonally higher prices of clothing items. Meanwhile, prices of services increased slightly by 0.07%, to contribute by 0.02% to monthly headline inflation. This was mainly due to higher prices of hairstyling services and the slightly higher prices at outpatient services.

Monthly core inflation was affected by price changes of the aforementioned core CPI items. Core food items contributed by 0.53% to monthly core inflation. Meanwhile, retail items and services items contributed by 0.11% and 0.03% to monthly core inflation, respectively.

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Source: egyptianstreets