Increase in fuel prices will exacerbate Egyptian inflation, says EFG Hermes

15 May 2008
The Egyptian government's decision to increase the price of petrol by£E0.50 a litre on 5 May will further exacerbate Egypt's inflation problem, according to investment bank EFG-Hermes.

"We believe that the changes, rising global food prices and demand-driven inflation will contribute to average consumer price inflation of 11.5 per cent in 2007-08 and 18 per cent in 2008-09," said the bank's economist Simon Kitchen.

Finance minister Youssef Boutros-Ghali and investment minister Mahmoud Mohieldin said that the inflationary impact of more expensive petrol would disappear in just one to three months.

Boutros-Ghali said that the government had to increase the cost of petrol to pay a 30 per cent rise in public sector salaries announced by president Hosni Mubarak in his birthday speech at the beginning of May.

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