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World News

Egyptian inflation continues to rise as food prices rise

CAIRO — Annual inflation in Egypt hit a new high in January as the country continues to struggle with ongoing price hikes and currency depreciation, Egypt’s statistics bureau said on Thursday.

The state-run Central Agency for Mobilization and Statistics released figures showing annual inflation stood at 26.5% last month, down from 21.9% in December. In January 2022, the same figure was just 8%, before soaring after the outbreak of the Russian war in Ukraine the following month, rocking the global economy.

During the month of January, commodity prices in Egypt rose steadily. The cost of bread and cereals rose an average of 6.6% while the price of meat and poultry soared 20.6%, the office said.

Egypt’s economy has been hit hard by years of government austerity, the coronavirus pandemic and the fallout from the war in Ukraine. Egypt is the world’s largest wheat importer, with most of its imports traditionally coming from Eastern Europe.

Low-income Egyptian households are being hit hard by the persistent rises, most of which rely on government subsidies for staples such as bread. Nearly 30% of Egyptians live in poverty, according to official figures.

In December, Egyptian authorities and the International Monetary Fund agreed on a $3 billion bailout to ease the crisis. The agreement with the IMF was concluded in exchange for Egypt implementing a number of economic reforms, including a move to a flexible exchange rate. The agreement also includes additional funding of $14 billion for Egypt.

The value of the Egyptian pound continued to decline following its decision to switch to a flexible exchange rate. The currency has lost around 50% of its value against the dollar since the start of 2022.

On Wednesday, the Egyptian government unveiled plans to sell stakes in dozens of state-controlled companies, including banks and energy companies. Economists have long criticized the economic dominance of the Egyptian government and military, calling it an obstacle to private sector growth.

Egypt also faces a shortage of foreign currency. Many banks have imposed limits on cash withdrawals abroad, while the Egyptian government has announced that it is postponing many future projects that would require significant foreign spending.

ABC News

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