CAIRO: Egypt's overall annual urban inflation dropped for the fourth time this year to 10.5 percent in May, the national statistics agency reported. According to reports, it means the central bank will have more leeway to maintain interest rates at the current levels. The Urban Consumer Price Index for May was at 147.1 versus 133.1 last year, the agency said last Thursday. Inflation in April came in at 11.4 percent. It was the lowest urban inflation has been since last August. Most analysts had predicted small drops in the inflation rate, but none had predicted the number would go so low. Most analysts, as reported by Reuters news agency, had forecasted a 10.7 percent. The cause of the drop in inflation was largely due to food and beverage prices declining. According to the government, nearly 45 percent of the measures used to gauge inflation come from food prices and spending power. Beltone Economist Reham ElDesoki told Reuters that she expected urban inflation to fluctuate in the summer, pressured by higher consumer spending during summer and the Muslim holy month of Ramadan. “We expect annual headline inflation to fluctuate in those summer months, possibly rising until September, when the lower monthly inflation and base effect lead to a decline in the annual change in the consumer index,” ElDesoki said. BM
