According to official figures released on Monday, Egypt’s annual inflation rate rose to an all-time high of 36.8% in June. The country is now suffering from a severe economic crisis.
The previous record of 34.2% in July 2017 was set after a significant currency devaluation resulting from a bailout loan from the International Monetary Fund, as it is presently.
Since early last year, the Egyptian pound has lost half of its value against the dollar, driving up prices and making it harder for households in the import-dependent nation to make ends meet.
The latest figures, a rise of almost 37 per cent from June last year, also showed a two per cent month-on-month jump from May this year.
The state statistics agency CAPMAS announced on Monday that, “Official data had shown skyrocketing inflation appearing to ease in the past few months, before food and drink prices alone registered a 64.9 per cent increase compared to June 2022.
The economic crisis has been worsened by Russia’s invasion of Ukraine last year, which destabilised crucial food imports.
Even before, 30 per cent of Egyptians were living below the poverty line, according to the World Bank.
After the invasion unsettled global markets, investors pulled billions out of Cairo’s foreign reserves, which have shown a slight increase this year. Reserves stood at $34.8 billion in March, up $500 million since February but still $7 billion less than before the war.
Around $28 billion of those reserves are deposits from wealthy Gulf allies, whose promises to purchase Egyptian state assets have stalled in recent months.
Egypt, the Arab world’s most populous country, has been dependent on bailouts in recent years, from both Gulf allies and the IMF.
Last year, the IMF approved a $3 billion loan for Egypt conditioned on “a permanent shift to a flexible exchange rate regime”.
Egypt is one of the five economies most at risk of defaulting on its foreign debt, according to rating agency Moody’s.
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.”