Egypt’s August inflation rate falls to 7.5%, lowest in years

Egypt's Finance Minister Mohamed Maait gestures during a news conference in Cairo, Egypt July 17, 2019. (Reuters)
Updated 10 September 2019

Egypt’s August inflation rate falls to 7.5%, lowest in years

  • The inflation rate was lower than some analysts expected
  • The July pace was 8.7%

CAIRO: Egypt’s annual urban consumer-price inflation rate declined to 7.5% in August, the lowest rate in years, and analysts said it opened the way for further rate cuts by the central bank.
The inflation rate, reported by the official statistics agency CAMPAS on Tuesday, was lower than some analysts expected. The July pace was 8.7%.
Egypt is approaching the end of an economic reform program backed by the International Monetary Fund that during 2017 saw inflation rise to a high of 33%.
Core inflation, which strips out volatile items such as food, also declined, to 4.9% in August from 5.9% in July, the central bank said on Tuesday.
According to Refinitiv data, August’s headline rate was the lowest in more than six years.
“[August’s rate] falls well below the 9% target the Egyptian Central Bank had set itself for the end of 2020. This paves the way for another large rate cut on Sept. 26,” said Jaap Meijer, head of equity research at Arqaam Capital.
The central bank cut rates by 150 basis points at its last monetary policy committee meeting, on Aug. 22, encouraged by the declining inflation rate.
Radwa El-Swaify, head of research at Pharos Securities Brokerage, said the August number is “positive and gives positive signs for interest rates in the next meeting. We expect a cut of 1%-1.5%.”
Egypt raised domestic fuel prices in July 2019 as part of the terms of the IMF agreement, and the increase had been expected to push up prices for transport, food products and other goods.
Nadene Johnson, an economist at NKC African Economics, said the August inflation number resulted partly from a favorable base effect from a year earlier. In August 2018, Egypt’s headline inflation rate was 14.2%, after subsidies were cut.
She also said a strengthening currency as well as low global oil prices “would support further easing of price pressures.”
“Nonetheless, with energy reforms complete, and with global oil prices on the bearish side, we expect inflation to ease gradually in the coming year, albeit slightly higher toward the end of this year,” Johnson said.


Oman said to mull new regional airline

Updated 10 min 28 sec ago

Oman said to mull new regional airline

DUBAI: Oman is considering setting up a new regional airline that could take over domestic operations from state carrier Oman Air, two sources familiar with the matter told Reuters.

A request for proposal was issued this month by state entity Oman Aviation Group for a feasibility study into operating the new airline, “Oman Link,” the sources said.

Setting up a new airline for domestic flights would allow Oman Air to focus on its international network where it competes with large Gulf carriers Emirates, Qatar Airways, and Etihad Airways.

The new airline could partner with Oman Air with both carriers connecting passengers to each other but would have its own independent management, the sources said on the condition of anonymity because the details are private.

Proposals are to be submitted by Nov. 11, one of the sources said.

The new airline would use regional jets for domestic flights and potentially later to other cities in the region where there is not enough demand to fill the larger single aisle jets used by other airlines in Oman.

FASTFACT

Oman Air operates flights to four airports in the country, including the main Muscat International.

Oman Aviation Group and its unit Oman Air did not respond to separate emailed requests for comment.

Oman Air operates flights to four airports in the country, including the main Muscat International, according to its website.

The airline uses 166-seat Boeing 737 jets and 71-seat Embraer E175 aircraft on domestic and regional flights.

Both aircraft types are too costly to consistently operate domestic routes at a profit, according to industry sources.

Oman has been restructuring its aviation sector in recent years. Oman Aviation Group was formed in 2018 and includes Oman Air, Oman Airports and Oman Aviation Services.

A budget, second airline, Salam Air, was launched in 2017. It is owned by Omani government pension funds and the Muscat municipality.

Last week, Eithad and Air Arabia said they were jointly setting up a low cost carrier in Abu Dhabi.