Egypt hits highest inflation level amid currency crisis

Egypt's economy is currently facing a significant challenge as inflation reaches its highest level in history.

Data from the state-run Central Agency for Public Mobilization and Statistics (CAPMAS) reveals that inflation soared to an annual rate of 36.5 per cent in July, marking a notable increase from the previous month's 35.7 per cent.

The primary factor driving this wave of inflation is the sharp and concerning rise in the costs of food and beverages, which have surged by an alarming 68.4 per cent.

Add WION as a Preferred Source

In response to the surge ininflation, the Egyptian central bank has increased the main interest rateby 100 basis points to 19.25 per cent. Experts, including analysts at Goldman Sachs Group, haveforecastedinflationto remain above 30 percent for the rest of the year.

The inflationary pressure has been particularly acute in Egypt, partly due to the ongoing conflict in Ukraine. As a major global wheat importer, Egypt heavily relies on supplies from the Black Sea region.

Egypt's acute shortage of foreign currency has further aggravated the situation and three devaluations of the Egyptian pound since early 2022 have added to the inflationary pressure.

Additionally, country's government debt is projected to reach around 93 per cent of the GDP in 2023. To address these challenges, the International Monetary Fund granted a $3 billion bailout to Egypt in December 2022. As part of the IMF-imposed conditions, Egypt iscurrently privatisingloss-making public assets.

Despite these challenging circumstances, there is a glimmer of optimism on the horizon. Some analysts anticipate a 'sharp decline' in inflation over the course of 2024, which could provide some relief to the struggling economy.

WATCH WION LIVE HERE