Central Bank of Egypt

Monthly Inflation Developments

Headline and Core Inflation – January 2018

 Annual headline1/ and core2/ (urban) inflation declined for the sixth consecutive month to record,
respectively, 17.1 percent and 14.4 percent in January 2018 compared to 21.9 percent and 19.9
percent in December 2017, after peaking in July at 33.0 percent and 35.3 percent. The headline and
core annual rates thereby registered, respectively, the lowest since October and September 2016.

 This decline was supported by tighter real monetary conditions, and was accelerated by strong
favorable base effects since November 2017.

 Monthly headline inflation registered in January 2018 a negative rate for the second consecutive
month, recording -0.1 percent after recording -0.2 percent in December 2017. This comes after
stabilizing in the period between August and November 2017 at around 1.1 percent, affected by
upward adjustments of regulated prices which accounted on average for 44 percent of monthly
headline inflation.

Headline and Core CPI Inflation 3/4/ Headline and Core CPI Inflation 3/4/
(m/m, in percent) (y/y, in percent)
6 36 CPI - All Items (100%)
Headline CPI
5 32
4 Core CPI 28 CPI excl. regulated items, fruits &
3 24 vegetables (74.43%)
20
2
16
1 12
0 8
-1 4
-2 0
Apr-13
Jul-13
Oct-13

Apr-14
Jul-14
Oct-14

Apr-15
Jul-15
Oct-15

Apr-16
Jul-16
Oct-16

Apr-17
Jul-17
Oct-17
Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18
Mar-16

Mar-17
Aug-16
Sep-16

Aug-17
Sep-17
Jan-16
Feb-16
Apr-16
May-16
Jun-16
Jul-16

Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Apr-17
May-17
Jun-17
Jul-17

Oct-17
Nov-17
Dec-17
Jan-18

Source: Central Agency for Public Mobilization and Source: Central Agency for Public Mobilization and
Statistics and Central Bank of Egypt. Statistics and Central Bank of Egypt.

1/ Published by the Central Agency for Public Mobilization and Statistics.

2/ Computed by the Central Bank of Egypt.
3/ CAPMAS publishes three CPI series: (1) the CPI for urban areas which include Cairo, Alexandria, urban Lower Egypt, urban Upper Egypt, Canal cities
and Frontier governorates, (2) the CPI for rural areas, and (3) the CPI for All areas. Numbers quoted in this note refer to CPI-Urban.
4/ It is important to underscore that the monthly percentage changes of both headline and core CPI between September 2009 and July 2010 do not
th
match rates of changes presented in previous inflation notes given the replacement of the 8 CPI series by the 9th series starting from August 2009 (Full
details are discussed in the Technical Appendix of the August 2010 Inflation Note).
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 Central Bank of Egypt
Monthly Inflation Developments

 Food inflation resumed its downward trend since August 2017, registering consecutive negative rates
over the last three months. Negative food inflation was witnessed for the first time since January
2016. In January 2018, lower food prices were driven by the negative inflation of fresh vegetables
and by the continued muted inflation of core food items.

 Prices of retail and services items remained broadly unchanged, while higher health insurance and
natural gas installment costs affected regulated items.

 Given the muted inflation of core CPI items, monthly core inflation inched up by 0.2 percent in
January 2018 after decreasing by 0.4 percent in December 2017. This compares to a monthly core
inflation rate of 1.3 percent in November and 0.7 percent in October, and an average of 0.3 percent
in August and September.

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 Central Bank of Egypt
Monthly Inflation Developments

Contributions to Monthly Headline CPI Inflation

Key Highlights: (in percentage point)
5.5 Fruits & Vegetables
Regulated Items
4.5
 Prices of fresh vegetables declined for the Core CPI
3.5
third consecutive month, decreasing by 2.87 2.5

percent, while prices of fresh fruits 1.5

0.5
increased by 2.44 percent. Together, they
-0.5
contributed by negative 0.26 percentage -1.5

Mar-16

Mar-17
Aug-16
Sep-16

Aug-17
Sep-17
Jan-16
Feb-16

Apr-16
May-16
Jun-16
Jul-16

Oct-16
Nov-16
Dec-16
Jan-17
Feb-17

Apr-17
May-17
Jun-17
Jul-17

Oct-17
Nov-17
Dec-17
Jan-18
points to monthly headline inflation.

Source: Central Bank of Egypt.

 Prices of regulated items rose by 0.46

Contributions to Annual Headline CPI Inflation
percent to contribute by 0.08 percentage (in percentage point)

36 Fruits & Vegetables

points to monthly headline inflation. This
32 Regulated Items
was due to higher prices of health insurance 28 Core CPI
24
services and natural gas installment cost. 20
16
12
8
 Prices of cheese and eggs increased by 1.47 4
0
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16

Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17

Oct-17
Nov-17
Dec-17
Jan-18
Aug-16
Sep-16

Aug-17
Sep-17
and 2.60 percent, respectively. Together,
they contributed by 0.08 percentage points
Source: Central Bank of Egypt.
to monthly headline inflation.
Contributions to Monthly Core CPI Inflation
 Prices of red meat remained unchanged in (in percentage point)
Other Services
Paid Services
January 2018 after declining in December Retail Prices
Poultry & Red Meat
2017 for the first time since December 2015. 6 Food Prices excl. Poultry & Red Meat
5
Red meat prices had stabilized between 4
3
September and November 2017 after 2
1
recording increases since April 2016. 0
-1
Jan-16

Mar-16

Mar-17
Feb-16

Apr-16
May-16
Jun-16
Jul-16

Oct-16

Feb-17

Apr-17
Aug-16
Sep-16

Nov-16
Dec-16
Jan-17

May-17
Jun-17
Jul-17

Oct-17
Aug-17
Sep-17

Nov-17
Dec-17
Jan-18

 Prices of poultry declined slightly by 0.03

Source: Central Bank of Egypt.
percent to record its eighth consecutive
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 Central Bank of Egypt
Monthly Inflation Developments

monthly decline. Contributions to Annual Core CPI Inflation

(in percentage point)
Other Services
Paid Services
 Prices of oil and fats increased by 0.65 Retail Prices
36 Poultry & Red Meat Prices
percent to contribute by 0.02 percentage 32 Food Prices excl. Poultry and Red Meat
28
points to monthly headline inflation. This 24
20
16
was due to higher prices of domestic butter. 12
8
4
0
 Prices of other food and services items

Apr-16

Apr-17
Jul-16

Nov-16
Dec-16

Jul-17

Nov-17
Dec-17
Oct-16

Oct-17
Jan-16

Mar-16

May-16
Feb-16

Jun-16

Jan-17

Mar-17

May-17
Feb-17

Jun-17

Jan-18
Aug-16
Sep-16

Aug-17
Sep-17
remained unchanged, while prices of retail
items increased marginally by 0.05 percent Source: Central Bank of Egypt.

due to gold prices.

 Monthly core inflation was affected by price

increases of the aforementioned core food
items, which contributed by 0.16 percentage
points to monthly core inflation. Retail items
contributed by 0.01 percentage points to
monthly core inflation.

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 Central Bank of Egypt
Monthly Inflation Developments

Table 1.
Classification of All Items included in Core CPI

Food Retail Paid Services Other Services

Bread and cereals Clothing Tailors, laundry & shoe repair Rentals (new law)
Meat Fabrics Dwelling maintenance services Rental value of owner occupied housing
Fish and other seafood Footwear Portman & gardener's services Hospital services
Eggs & Dairy products Products related to dwelling repairement Cook & maid's services Transportation Services
Oils and fats Furniture Technicians to HH appliances Mobile & internet services
Dried fruits Carpets and other floor covering Repairs of Audio-visual equipment Recreational & sporting services
Processed vegetables Household (HH) textiles Physicians Cultural services
Pulses HH appliances Mechanics Hajj & Omra trips
Sugar and confectionery Glassware, tableware and HH utensils Teachers Restaurants and Cafes
Other food products HH small tools & supplies Hairdressers Accommodation services
Beverages HH cleaning products Private schools
HH miscellaneous products
Purchase of vehicles
Spare parts
Motor oil
Telephone & telefax equipment
Home entertainment equipment
Recreational equipment
Personal care supplies and products
Personal effects
Books
School supplies
Medical care goods

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 Central Bank of Egypt
Monthly Inflation Developments

Table 2.
Consumer Price Index and Major Components 1/

Weight in January 2018 to January 2018 to

January 2017 January 2018
basket 2/ December 2017 January 2017

(in percent) (index) (percentage change)

(January 2010 = 100)
Headline - All items 100.00 220.29 257.89 -0.06 17.07
Food and beverages 39.92 278.36 325.26 -0.30 16.85
Tobacco and related products 2.19 400.66 518.35 0.00 29.37
Clothing and footwear 5.41 156.93 198.23 0.00 26.32
Housing, water, electricity, gas and
other fuels 18.37 140.62 155.85 0.21 10.84
Furnishings, household equipment and
routine maintenance of the dwelling 3.77 197.08 223.76 0.00 13.54
Medical care 6.33 190.51 209.06 0.00 9.74
Transportation 5.68 176.13 205.11 0.00 16.45
Communications 3.12 98.59 109.41 0.00 10.97
Recreation and Culture 2.43 211.48 293.88 0.00 38.96
Education 4.63 246.00 294.16 0.00 19.58
Hotels, cafes and restaurants 4.43 257.23 292.51 0.00 13.71
Miscellaneous goods and services 3.73 150.24 185.31 2.49 23.34

Selective aggregates
Fruits & vegetables 3/ 6.90 396.57 500.71 -1.88 26.26
Regulated items 18.66 203.99 247.87 0.46 21.51
Food excl. fruits & vegetables 31.08 262.98 300.09 0.30 14.11
Retail items 14.48 175.77 205.91 0.05 17.15
Paid services 5.87 214.20 255.51 0.00 19.29
Other services 23.00 152.50 169.45 0.00 11.11
Core CPI 74.43 208.03 237.88 0.17 14.35
1/ Source: CAPMAS and CBE calculations
2/ Based on 2008/2009 Household Expenditure Survey
3/ Excluding pulses, processed vegetables and dried fruits