CAIRO, Oct 10 (Reuters) - The rising cost of food and drinks pushed Egypt's annual urban inflation back into double figures in September, its first rise in 10 months, and almost guaranteed the end of a monetary loosening cycle.
Urban inflation, the most closely watched indicator of price moves, jumped to 10.8 percent in the year to September from 9.0 percent in the year to August, figures from the state-run CAPMAS statistics agency showed on Saturday.
The index for urban inflation was 141.3 in September compared to 138.7 in August and 127.6 in September 2008.
The main rise was seen in food prices, which jumped 3.7 percent on the month, while culture items gained 0.7 percent. Food and drinks constitute the single largest category in the basket and have risen 23.6 percent since the start of the year.
'The increase is higher than we expected but it confirms that seasonal changes in inflation are significant as we previously indicated,' said Reham ElDesoki, senior economist at Beltone Financial.
Food prices had gained 4.2 percent month-on-month in July in the run-up to the Muslim fasting month of Ramadan, when Egypt's majority Muslim population traditionally visit family and friends to break the day's fast with a large evening meal.
'The last cut was the end of the monetary loosening cycle, as we expected,' ElDesoki said.
The central bank cut key interest rates by 25 basis points last month, saying it thought underlying inflation would remain within its 'comfort zone' despite seeing an inching up in headline inflation in coming months.
That cut was the sixth straight reduction since last September. In August last year, urban inflation hit a high of 23.6 percent, but had declined in all but one month since then.
Egypt, which subsidizes bread and some other staples for its poorest, struggled to shoulder soaring global commodity prices last year and food prices have remained stubbornly high this year.
Prime Minister Ahmed Nazif said in May that the government expected inflation in Egypt to fall to single digits in the summer, which it did in July and August.
(Reporting by Mohamed Samir and Alastair Sharp; Editing by Jerry Norton) Keywords: EGYPT INFLATION/ (alastair.sharp@reuters.com; Cairo newsroom +20 2 2578 3290) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Urban inflation, the most closely watched indicator of price moves, jumped to 10.8 percent in the year to September from 9.0 percent in the year to August, figures from the state-run CAPMAS statistics agency showed on Saturday.
The index for urban inflation was 141.3 in September compared to 138.7 in August and 127.6 in September 2008.
The main rise was seen in food prices, which jumped 3.7 percent on the month, while culture items gained 0.7 percent. Food and drinks constitute the single largest category in the basket and have risen 23.6 percent since the start of the year.
'The increase is higher than we expected but it confirms that seasonal changes in inflation are significant as we previously indicated,' said Reham ElDesoki, senior economist at Beltone Financial.
Food prices had gained 4.2 percent month-on-month in July in the run-up to the Muslim fasting month of Ramadan, when Egypt's majority Muslim population traditionally visit family and friends to break the day's fast with a large evening meal.
'The last cut was the end of the monetary loosening cycle, as we expected,' ElDesoki said.
The central bank cut key interest rates by 25 basis points last month, saying it thought underlying inflation would remain within its 'comfort zone' despite seeing an inching up in headline inflation in coming months.
That cut was the sixth straight reduction since last September. In August last year, urban inflation hit a high of 23.6 percent, but had declined in all but one month since then.
Egypt, which subsidizes bread and some other staples for its poorest, struggled to shoulder soaring global commodity prices last year and food prices have remained stubbornly high this year.
Prime Minister Ahmed Nazif said in May that the government expected inflation in Egypt to fall to single digits in the summer, which it did in July and August.
(Reporting by Mohamed Samir and Alastair Sharp; Editing by Jerry Norton) Keywords: EGYPT INFLATION/ (alastair.sharp@reuters.com; Cairo newsroom +20 2 2578 3290) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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