October 10, 2018 / 8:18 AM / a month ago

UPDATE 2-Egypt's headline inflation rises to 16 pct in Sept- CAPMAS

(Adds core inflation)

CAIRO, Oct 10 (Reuters) - Egypt’s annual urban consumer inflation rose to 16 percent in September from 14.24 percent in August, the official statistics agency CAPMAS said on Wednesday, in a report that surprised some economists and analysts.

Inflation rose 2.5 percent month-on-month, largely driven by a 4.8 percent jump in the price of food and non-alcoholic beverages from August to September.

The rising inflation rate “reflects the continuation of massive increases in the prices of fruits and vegetables on a monthly basis, and, to a lesser extent, the ... back to school season,” said Radwa El-Swaify, head of research at Pharos

Millions of people in Egypt, the Arab world’s most populous country, live below the poverty line. They are struggling to meet basic needs after successive increases in the prices of vegetables, fruit, fuel, and medicine.

Egypt’s latest round of austerity measures in June included deep fuel and electricity subsidy cuts as well as increases in transportation prices. They came as part of the terms of a $12 billion International Monetary Fund loan programme Egypt agreed to in late 2016.

Core inflation, which strips out volatile items such as food, slipped to 8.55 percent in September from 8.83 percent in August, data from the central bank showed.

The headline inflation rate had eased in July to 13.5 percent after it increased for the first time in 10 months this June.

“Depending on the data for October, if inflation continues to go up, we could start to wonder if we’re looking at a potential (interest) rate hike in November,” said Allen Sandeep, head of research at Naeem Brokerage. (Reporting by Nadine Awadalla and Ehab Farouk in Cairo, Asma Alsharif in Dubai; editing by Maher Chmaytelli, William Maclean, Larry King)

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