CAIRO — Egypt’s annual inflation rate in urban areas reached 15.5 percent in August, a surge of nearly two percentage points over the previous month, according to data released Thursday by the state statistics bureau.
It said food and beverages prices, the single largest component in the basket of goods and services used to gauge inflation, rose to 19.3 percent in August compared to last year and by 1.6 percent over July.
The rise is mostly attributed to the Egyptian pound’s depreciation and last month’s hike in charges for domestic electricity use.
Egypt’s double-digit inflation follows last month’s provisional agreement with the International Monetary Fund for a $12 billion loan over three years to overhaul its ailing economy. Egypt is expected to introduce far-reaching economic reforms to secure the loan.
Abdel-Fattah el-Sissi, Egypt’s general-turned-president, has repeatedly cautioned Egyptians in recent weeks that tough times lie ahead as his government seeks to revive the economy, battered by five years of turmoil since a popular uprising forced longtime ruler Hosni Mubarak to step down.
State subsidies on fuel are expected to be gradually lifted, new tax introduced and the weakening currency either devalued or floated, measures that are virtually certain to impact on the lives of most Egyptians.
On Thursday, el-Sissi ratified new legislation adopted by parliament last week to introduce a 13 percent value added tax on a wide range of goods and services.
Earlier this week, el-Sissi swore in a retired army general as the new supply minister, a key post whose occupant takes charge of Egypt’s vast wheat imports and the government’s massive but inefficient food subsidy program. While the appointment of Maj-Gen. Mohammed Ali el-Sheikh offered the latest evidence of the military’s growing role in the running of the country, it also signaled the president’s exacerbation with corruption and inefficiency in the food subsidy program on which a majority of Egypt’s 91 million people depends.
El-Sheikh replaced Khaled Hanafi, who quit last week amid corruption allegations involving wheat procurement. Hanafi has not been charged with any crime.
Sworn in with el-Sheikh on Wednesday were six new provincial governors, five of whom hail from the Egyptian military or the highly militarized police force. Men with similar background now run at least 18 of Egypt’s 27 provinces.