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Egypt: Inflation into double digits as Ukraine war hits economy

Egypt's dependence on Ukrainian imports has raised fears of hardship as inflation hits 10 percent
A tourist checks herbs and spices displayed at a market in Aswan in Upper Egypt (AFP)

Inflation in Egypt rose to 10 percent in February, according to official figures released on Thursday, as the country braces itself for economic woes as a result of Russia's invasion of Ukraine.

"The annual headline inflation rate recorded 10 percent for February 2022, compared to 4.9 for the same month last year," the Central Agency for Public Mobilisation and Statistics (CAPMAS) said in a statement. 

In May 2019, the inflation rate in Egypt - a country heavily dependent on Ukrainian wheat - hovered at 11 percent, before easing in the following months.

CAPMAS attributed the latest hike to a surge in prices of food especially vegetables, bread and grain. 

Last week, the global food price index reached an all-time high, soaring 24.1 percent above its level the year before, according to the UN's Food and Agriculture Organisation (FAO).

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Ukraine dependency

Russia's invasion of Ukraine last month has aggravated a global surge in prices of key commodities, including food and oil.

On Wednesday, Egypt's finance minister, Mohamed Maait, said the Russia-Ukraine crisis will directly affect Egypt.  

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Wheat provision in the state's budget "will soar by around 15bn Egyptian pounds ($1bn)", he told a news conference.

Egypt, one of the world's largest wheat importers, currently purchases a tonne of wheat at $400, up from $250 last year.

The country has undertaken tough austerity measures, including slashing subsidies and floating the local currency in 2016, as part of IMF-backed economic reforms.

Poor and middle class Egyptians have been especially hit by the tough measures, which saw inflation peak at 34 percent in 2017.

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