CAIRO: Urban annual consumer price inflation for February fell to 12.8 percent, down from 13.6 percent in January and slightly below analysts' expectations. Predictions from analysts had ranged from 12.4 to 13.9 percent, but settled on a mean of 13.3 percent, according to Reuters. Three out of six analysts saw annual urban inflation rising to a year high, so the surprisingly low figure could represent an ongoing trend of decline, or a potentially unsustainable fluke. Analysts from BOA-Merrill Lynch, Beltone Financial, CI Capital, EFG-Hermes, HC Securities and Prime had disagreed whether the annual urban inflation rate would slide and how this would affect the Central Bank of Egypt (CBE)'s monetary policy. Egypt's core annual inflation, which strips out subsidised goods and volatile items, fell to 6.9 percent in February from 7.39 percent in January, reported Reuters. The Monetary Policy Committee's next meeting is scheduled for March 18, when it is possible the committee will allow overnight lending rates to rise once again, should inflation fears emerge sufficiently mollified by February's data. Key overnight interest rates have remained unchanged since October, with cuts initiated a year ago. On Feb. 4 the CBE again decided to leave rates unchanged, and has yet to release a statement on the potential impact of the latest inflation figures. The annual urban inflation rate includes volatile commodities (such as fruits and vegetables) and subsidized items, staples for the majority of Egyptian households, while core inflation excludes these items in its data. Four out of six analysts polled by Reuters forecast core annual inflation slipping to an average of 7.25 percent in the year to February compared to 7.39 percent in January. Forecasts range from a decline to 7 percent to a rise to 7.6 percent. Consumers are still paying more than last year, as the price of food and beverages has risen 22.6 percent year on year, despite the month on month decrease. In a note commenting on the news, Beltone Financial said, "We expected annual inflation to drop to 12.5 percent in February in the absence of any seasonal related rises in food prices and the subsiding of the one-off rise in fuel prices. The annual change in utilities and fuel prices declined to 1.5 percent, from 3.8 percent over the same period. The monthly change in the consumer price index declined to 0.3 percent in February, form 0.8 percent in January with the change in food prices declining 1 percent in February, from 1.1 percent the month before. "We anticipate a rise in annual inflation in March due to the reported rise in prices of diesel on the black market, leading to a rise in costs of transportation and some commodities, Beltone said.
