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DUBAI: Food inflation is expected to accelerate in Egypt as economic activity picks up, ADCB said in a report. It comes as the United Nations Food Agency predicts
a double-digit spike in global food import costs this year.
Egypt’s inflation accelerated to a five-month high of 4.8 percent year-on-year in May, up from 4.1 percent the previous month, with the jump largely driven by food prices, the Abu Dhabi-based bank said in a weekly note to clients.
The three-month moving average for food price inflation is now at its highest level for at least two years.
"We expect to see more upward inflationary pressure in the coming months with further increases in food prices,” ADCB said. '“Despite this, inflation remains below the Central Bank of Egypt’s (CBE) target range and overall we see upward inflationary pressures as being broadly contained.”
ADCB expects the CBE to keep interest rates on hold at its June 17 meeting with the lending rate remaining at 9.25 percent and the deposit rate at 8.25 percent.
Rising food costs represent a concern for several Arab economies that rely heavily on imports. Global food import costs are expected to rise 12 percent in 2021 to a record due to surging commodity prices, the Food and Agriculture Organization (FAO) said last week.