Egypt’s Inflation Soars to Record 39.7% in August, Central Bank Struggles To Contain Surge

Data from Egypt’s Central Agency for Public Mobilization and Statistics revealed that the country’s headline inflation soared to a record high of 39.7% in August, up from 38.2% in July and a drastic surge compared to 15.3% in August 2022.

Various sectors have been hit hard: food and beverage prices rose by 71.9%, alcoholic beverages and tobacco surged by 57.6%, while the cost of restaurant and hotel services increased by 49.5%. Household appliances and furniture saw a hike of 42% over the past 12 months.

Amid a depreciating local currency and a shortage of foreign exchange, Egypt’s Central Bank raised interest rates by 100 basis points in early August, marking the second increase this year following a 2% rise in March. Despite these efforts, the Egyptian pound lost nearly half of its value since March 2022.

Egypt’s foreign debt grew by 4.8%, reaching $165.3 billion at the end of March 2023. The government is intensifying efforts to attract foreign investments and revive the tourism sector, as it wrestles with escalating economic challenges.