Egypt’s inflation climbs in December as food costs rise

Egypt’s inflation accelerated in December on rising food prices, one of the factors that fueled the protests that toppled President Hosni Mubarak last year.

The annual inflation rate in urban parts of Egypt, the gauge that the central bank monitors, rose to 9.5 per cent from 9.1 per cent in November, according to data posted on the website of the official statistics agency today. Food and beverage costs, the biggest component in the consumer price index, increased an annual 13.2 per cent in December compared with 11.6 per cent in November, the data showed.

In November, Egypt’s central bank raised its benchmark deposit rate by a percentage point to 9.25 per cent, the first increase for more than three years. The bank cited inflationary pressures when it raised its on November 24. Some economists said its real purpose was to stem flight from the Egyptian pound as violence flared between security forces and protesters calling on the generals who took over from Mubarak to step down.

The economy is still struggling to recover from the unrest before and after the fall of Mubarak in February, which has deterred tourists and foreign investors. Gross domestic product grew 1.8 per cent in the fiscal year that ended June 30, its weakest performance in at least 10 years.

Egyptians head to the polls today for the runoffs of the third and final round of election for the lower house of parliament. The vote has been largely peaceful though renewed violence between security forces and protesters in December left at least 17 dead.

Islamist groups, led by the Muslim Brotherhood, are dominating the vote.