Egypt inflation hits record high of nearly 40%

CAIRO: Annual inflation in Egypt hit 39.7 percent in August, official figures showed Sunday, an all-time high for the country as it grapples with a punishing economic crisis.

It comes immediately after the previous record of 38.2 percent was recorded in July, and over a year into an unrelenting economic crisis that has seen the currency shed half its value against the US dollar since early last year.

Food and drink prices alone registered a 71.9 percent increase compared to August 2022, state statistics agency CAPMAS announced on Sunday, adding to the burden of families who have been struggling to make ends meet.

The economic crisis in the import-dependent country was catalysed by Russia’s invasion of Ukraine last year, which destabilised crucial food supplies and unsettled global markets.

Investors pulled billions out of Cairo’s foreign reserves, which remain buoyed by deposits from wealthy Gulf allies whose promises to purchase Egyptian state assets have fallen short of government targets.

Even before the current crisis, 30 percent of Egyptians were living below the poverty line, according to the World Bank, with another 30 percent vulnerable to falling into poverty.

Egypt, the Arab world’s most populous country, has been dependent on bailouts in recent years, from both Gulf allies and the International Monetary Fund.

Last year, the IMF approved a $3 billion loan for Egypt conditioned on “a permanent shift to a flexible exchange rate regime”.

The country’s external debt bill has tripled over the past decade, rising to a record high of $165.4 billion this year, according to Ministry of Planning figures.