Impact of Iran's War Drives Inflation in Egypt to 15.2%

SadaNews - Inflation in Egypt continued to accelerate for the second consecutive month, influenced by the war in Iran which led to an increase in energy prices and a decline in the value of the pound, at a time when the country faces a widespread wave of inflation affecting most goods and services.

The annual inflation rate in Egyptian cities recorded 15.2% in March, compared to 13.4% in February, according to data from the Central Agency for Public Mobilization and Statistics.

On a monthly basis, the inflation rate accelerated to 3.2% in March, compared to 2.8% in the previous month.

Currency Decline Exacerbates Pressures

The Egyptian pound has faced significant pressure, declining by about 10% since the outbreak of the war, with foreign investments withdrawing from local debt instruments estimated at around $8 billion, according to Moody's.

The depreciation of the currency increases the cost of imports, fueling inflationary pressures, especially given Egypt's reliance on imports to meet a large part of its needs, particularly for energy.

Increases in Fuel and Transport

The government has raised fuel and gas prices by rates ranging from 14% to 30%, marking the third increase in a year, which affects transportation and production costs.

Additionally, the prices of railway tickets and some metro fare categories have risen by up to 25%, along with increases in electricity prices for commercial activities ranging from 20% to 91%, and for household consumption from 16% to 28%, starting in April.

Continuous External Pressures

These developments coincide with pressures on foreign exchange resources, with indications of a slowdown in tourism and a decrease in shipping traffic through the Suez Canal.

Although inflation has retreated from its peak of 38% in September 2023, analysts believe that the continuation of tensions could push prices up again and increase challenges for monetary and financial policy.