Egypt’s inflation rate is expected to rise by between 3 and 4.5 percent following last week’s fuel price hike, Deputy Finance Minister Ahmed Kojak said on Monday.
Global Search House expected prices to resume rally again after Egyptian government enacted a second round of economic reforms at the beginning of the fiscal year 2017/2018.
Egypt hiked up fuel prices on Thursday to 50% to help meet the terms of their $12bn deal with the IMF.
The country’s inflation rate fell to 29.7% in May from 31.5% in April, the first decline since the currency was devalued seven months ago.
The figures published by the Central Bank of Egypt (CBE) showed that year-on-year core inflation declined to 30.5% in May, down from 32.1% in April.
Core inflation excludes volatile commodities such as food and energy.
Dubai-based Arqaam Capital expect inflation to soar again in the coming months due to fiscal reforms.
Arqaam Capital welcomed the drop but said it did not necessarily mean the worst was over yet for Egyptian consumers.
HSBC said in a research note that the downward trajectory could reverse in the near term, particularly if the government delivers on the next round of subsidy cuts and VAT increases in July (the beginning of the new fiscal year).