Egypt: 2009 inflation rate dropped

Egypt: 2009 inflation rate dropped

 CAIRO: Egypt’s rate of inflation in 2009 declined to 11.8 percent compared to 19.2 percent in 2008, a recent report from the Central Agency for Public Mobilization and Statistics Authority (CAPMAS) said. The basis of the average indices for 2009 attributed to the average indices for 2008 were the basis for the study.

Major General Abu Bakr al-Gundi, CAPMAS chairman, said that the annual rate of change (inflation) in December rose to 13.1 percent compared to the same month of 2008, it had scored 12.9 percent in November of last year. He stated that the rate of monthly change in the month of December recorded a fall of 1.5 percent compared to November and the previous rate of decline was 0.1 percent. He was optimistic 2010 would see further declines in the country’s inflation.

Gundi explained that the low monthly rates of change of some influential areas such as food and drink, meat, poultry, fish and seafood, milk, cheese, fruits and vegetables resulted in lower monthly percentage changes throughout the year for consumer prices by the end of 2009.

He pointed out the low figure in consumer prices (inflation rate) for a total of 1.5 percent and in rural areas by 1.8 percent and 1.3 percent in urban centers. The rate of change also recorded in the prices of food and drink fell by 2.9 percent; in rural areas by 3 percent and in urban areas 2.7 percent.

In related news, a report by the ministry of finance on budget performance during the period from July to November of the current fiscal year revealed that the total public expenditure declined by 7.4 percent to 114 billion Egyptian pounds compared to 124.4 billion Egyptian pounds during the same period last year.

The report attributed this decline to the marked reduction in the expenses of “support, grants and social benefits” of about 57 percent to reach 20.7 billion Egyptian pounds compared to 48.3 billion Egyptian pounds last year due to declining world prices for most strategic subsidized commodities.

The report noted the raising wages and compensation of employees during this period, which they said rose 12.3 percent to reach 32.1 billion Egyptian pounds and increased interest paid on public loans by 44.9 percent to 28.7 billion Egyptian pounds, higher spending on public investment by some 25 percent to a record 14.2 billion Egyptian pounds.

The report showed a decline in revenues and grants by 28.7 percent to 66.7 billion pounds in addition to a reduced income tax rate of 6 percent “as a reflection of the impact of slowing domestic economic activity and the global financial crisis, grants also dropped by about 69 percent to achieve 1.7 billion pounds.”

The revenues from property taxes rose more than four times the value achieved during the same period the previous year, to reach 3.6 billion pounds, the ministry said.

The decline in public revenues, despite the decline in public expenditure, has led to an increase in the percentage of total deficit in the budget of about 1.1 percent, meaning the total deficit is some 48 billion pounds, which represents 4.1 percent of GDP.