Egypt annual urban inflation in April came in at 30.6%

Newsletter

11 May 2023

Egypt annual urban inflation in April came in at 30.6%, cooling down from 32.7% the month before. This is the first time the inflation ease in April since June 2022, thanks to a slowdown in food price growth and a favorable base effect. It’s worth mentioning that the Egyptian government raised the price of diesel by one EGP to 8.25 EGP per liter (27 US cents) earlier this month, which saves the state treasury more than half a billion dollars annually, while keeping gasoline prices constant, a decision that is expected to directly affect inflation figures for the month of May. (Asharq Business)

Moving to the US inflation rates, US inflation eased to 4.9% in April as Fed tightening takes effect.
Core price pressures also dipped as economy showed signs of cooling. US inflation was slightly weaker than forecast in April, in a positive sign that the Federal Reserve’s cycle of interest rate rises is bringing price rises under control. Consumer price inflation dipped to an annual rate of 4.9%, its lowest level since April 2021. It was expected it to remain steady at 5%. (Financial Times)
Ration card holders will now face tighter limits on how much subsidized food they can buy per month under a Supply Ministry directive issued last Tuesday.
Beneficiaries will be limited to purchasing 1-4 bottles of cooking oil and 1-6 kgs of sugar, depending on the size of the family. They will also have to choose between purchasing 1-2 kgs of rice or pasta. The ministry raised the prices of almost all subsidized commodities sold to ration card holders earlier this month and indicated it would make further incremental price hikes. The state supports some 64 mn ration card holders, providing them with over 30 subsidized commodities. (Al Mal)
The Madbouly government’s spending plans and fiscal projections for FY 2023-2024 were delivered to the House.
Economic growth will inch down to 4.1% in the coming fiscal year from a projected 4.2% in FY 2022-2023 and 6.6% last year. Though the projected growth rate is below the initial 5% forecasts, it remains above the 2.8% forecasted for the global economy, Planning Minister Hala El Said told MPs while delivering her statement on the FY 2023-2024 socioeconomic development plan. (Asharq Business)
In addition, it is expected by the government that the headline inflation will average 16.0% over the 12-month period, down from a projected 19.6% this year.
Inflation has hit its highest levels in more than five years this year thanks to the combination of currency devaluation and high commodity prices. Also, the government sees Brent crude prices averaging 80 USD per barrel from July 2023 through to June 2024. This is down from 94 USD / barrel this fiscal year. Wheat prices are expected to remain significantly above pre-2021 levels, with US wheat averaging USD 240 per ton over the 12-month period. This is down from USD 424 / ton this year, which saw global prices surge on the back of the disruption caused by the war in Ukraine. (Asharq Business)
Moreover, the Madbouly government announced new support measures for households and businesses struggling through an economic crisis,
and sought to reassure MPs that the economy remains on an even footing amid anxieties over inflation and the ongoing foreign exchange crunch. The export subsidy will see the highest upward percentage change in next year’s budget to reach 28 billion EGP. The government will spend 19.5 billion EGP on subdizing loans to industrial and agricultural companies. (Hapi Journal)
MSCI will give Egyptian securities listed in its benchmarks “special treatment” in the wake of investor concerns over Egypt’s limited FX liquidity.
MSCI said it would not “implement any changes as part of upcoming index reviews for any securities classified in Egypt.” The company will announce which stocks it is adding and removing from its indices in its quarterly review after US markets close tomorrow. (Reuters)
Egyptian Cabinet ratifies double taxation avoidance agreement with Qatar
Egyptian Cabinet has endorsed the presidential draft law on the double taxation avoidance agreement signed between Egypt and Qatar to prevent tax evasion. The agreement shall be applicable to income taxes imposed by one of the two countries, including those levied on earnings resulting from disposing tangible and intangible assets as well as gross wages and salaries paid by enterprises. Earlier in February, Egypt and Qatar signed an agreement to eliminate double taxation on income and prevent tax evasion within the framework of bolstering bilateral economic relations and shoring up cooperation in several fields. (Arab Finance)
Two GCC companies interested in buying Egypt’s Gabal El Zeit, Zafarana wind farms.
The Saudi-based power plants developer ACWA POWER and UAE’s Alcazar Energy have shown interest in acquiring the wind farms located in Egypt’s Gabal El Zeit and Zafarana. The two companies are among seven international and local firms interested in the takeover deal, including Egypt-based renewables provider Infinity. The transaction is expected to be finalized before the end of 2023. (Asharq Business)
Fresh has acquired an 80% stake in air compressor manufacturer Misr Compressor for an undisclosed sum.
The home appliances manufacturer acquired a 40% stake in the firm through the exit of Saudi investment group Dallah Albaraka, 9% through the exit of Saudi-Egyptian Industrial Investment, and another 9% through the exit of MidBank, with the remaining shares coming from undisclosed investors. National Bank of Egypt, Suez Canal Bank, and Misr Ins. hold the remaining 20% in the company. (Al Mal)
FRA greenlights trading on A Capital Holding’s shares in EGX.
The Financial Regulatory Authority (FRA) has approved starting trading on A Capital Holding’s 902,789,840 shares, a demerged firm from Amer Group Holding (AMER). A Capital Holding’s capital amounts to 270.837 million EGP at a nominal value of 0.30 EGP per share. On December 19th, the extraordinary general meeting (EGM) of Amer Group approved the horizontal demerger of the company into two companies. (Mubasher)