FX.co ★ Egypt's inflation skyrockets to 37.4%, y/y

According to the state statistics agency CAPMAS, annual inflation in Egypt hit 37.4% in August. Notably, consumer prices stood at 36.5% in July. On a monthly basis, inflation in Egypt soared by 1.6% and 1.9% in August and July respectively. Meanwhile, food and drink prices alone rose 71.9% year-on-year. Notably, inflation has been above 30% for most of this year, bringing acute headaches for the Egyptian government. The authorities still need to implement currency reforms, especially a flexible exchange rate regime required to unlock the second $3 billion tranche of the IMF loan. The IMF is demanding reforms aimed at building up sufficient foreign exchange reserves. By fulfilling this condition, Egypt will have access to funds and be able to cope with soaring inflation. The country has already seen three devaluations since the beginning of 2022, which certainly harmed the economy, increasing the cost of imports when there was a shortage of foreign currency. Today, businesses and households have to pay more to get US dollars in the local black market.