Egypt's urban consumer inflation rises to 14.4% in June

Cairo: Egypt's annual urban consumer inflation surged to 14.4 per cent in June from 11.4 per cent in May, surprising some economists after 10 months of steady decline, and analysts said the rise could prolong the current level of interest rates.
The rise, reported by the official statistics agency CAPMAS, follows increases in fuel, electricity and taxi fares in June.
The hikes were part of efforts to meet the terms of a $12 billion International Monetary Fund loan programme from late 2016 that included cuts in energy subsidies and tax increases.
"It's certainly higher than we estimated," said Allen Sandeep, head of research at Naeem Brokerage. "It is of course for the most part taking into account the fuel subsidy cut."
The head of research at Pharos Securities Brokerage, Radwa El Swaify, said the impact of fuel price rises appeared faster than expected.
"We had expected the 3.5 per cent MoM increase in CPI to hit the July numbers, rather than June, which means that the spike in cost had reflected on prices faster than estimated.
"Consequently, we expect July monthly inflation to hit 2.5 per cent-3.5 per cent, and annual inflation to score 14.5 per cent -15.0 per cent, but level off gradually to 13 per cent -13.5 per cent by December 2018."
Sandeep said transport costs soared by 34.2 per cent month-on-month, while utilities rose by 7 per cent, accounting for the bulk of the increase.
The government in May raised metro fares in a move that increased public discontent, sparking brief protests by dozens of commuters.
Inflation soared to a record high of more than 33 per cent in July 2017 after the import-dependent country floated its currency, the pound, in November 2016. Inflation has eased since then, slowing to its lowest level in almost two years in May.
Sandeep said that month-on-month, inflation rose in June by 3.5 per cent, compared to 0.2 per cent in May.
He said the sharp increase was likely to push the government to prolong monetary austerity, after the central bank's decision last month to keep key interest rates unchanged.
"This reinforces views that monetary austerity is here to stay until year's end," Sandeep told Reuters.
El Swaify agreed.
"Rates (are expected) to be maintained until November 2018," she said, referring to interest rates.
Egypt's central bank on June 28 kept its key interest rates unchanged, expressing concern that inflation would rise after the fuel and electricity prices increases earlier that month.
The bank said the Monetary Policy Committee had decided to keep its deposit and lending rates at 16.75 and 17.75 per cent respectively.