Egypt inflation soars to near 33 percent amid subsidy cuts

FILE -- In this Oct. 26, 2016 file photo, volunteers from a local supermarket sell sugar after a market shortage, in the Sayeda Zeinab neighborhood of Cairo, Egypt. In the latest move in the government's ambitious economic reform plan, Egypt is curtailing access to ration cards that are used by three-quarters of the country's 93 million people to buy subsidized food items. A decree that went into effect Wednesday, August 9, 2017, denies access to the cards to state and private sector employees earning more than 1,500 Egyptian pounds, or about $84, a month. (AP Photo/Nariman El-Mofty, File)

CAIRO — Egypt's inflation has jumped to almost 33 percent, the government said Thursday as Egyptians continue to brace themselves in the face of steep price hikes and austerity measures.

According to figures published by the Central Bank, the urban annual inflation rate reached 32.95 percent in July — up from 29.76 percent in June. The announcement comes amid forecasts that the inflation rate would remain above 30 in the coming months.

The Central Bank also said that annual core inflation increased to 35.26 percent, up from 31.95 in June. Core inflation excludes volatile commodities such as food and energy.

Dubai-based Arqaam Capital attributed the hike in urban inflation to the increase in fuel prices the month before. It also said a July surge in electricity prices will impact August's rate.

In June, Egypt raised prices for commonly used fuel — 80-octane gasoline and diesel by 55 percent and doubled the price of gas canisters, used in the majority of households for cooking.

The government later upped electricity prices by more than 40 percent, followed by surges in public transportation fares and drinking water.

"Annual inflation is expected to remain in the 31-32 percent range in the next two months, before starting its quick descent in November," Arqaam said in its report, adding that it may reach low 20s by year's end.

Earlier this week, Egypt's government restricted access to new food ration cards, used by three-quarters of the country's 93 million people, in attempt to cut the high subsidy bill.

The monthly income cap for those who can now apply for ration cards was set at 1,500 Egyptian pounds ($84) for private and public sector employees. The caps for other segments of the population were lower and the cards were from now on limited to families of up to four members. Current holders are not affected by the new limits.

Egypt embarked on its reform program shortly after President Abdel-Fattah el-Sissi took office in 2014. He has pleaded with Egyptians to endure the tough austerity measures, promising they would spur economic recovery.

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