ANNUAL inflation in Egypt hit 39.7 percent in August, official figures showed Sunday, an all-time high as the Arab world’s most populous country grapples with a punishing economic crisis.
It comes after a previous record of 38.2 percent in July and amid an unrelenting downturn that has seen the currency shed half its value against the US dollar since early last year.
Food and drink prices alone rose 71.9 percent year-on-year, said the state statistics agency CAPMAS.
The economic crisis in the import-dependent country was catalysed by Russia’s invasion of Ukraine last year, which destabilised crucial food supplies and unsettled global markets.
Investors pulled billions out of Cairo’s foreign reserves, which remain buoyed by deposits from wealthy Gulf allies, whose promises to purchase Egyptian state assets have however fallen short of government targets.
Even before the current crisis, 30 percent of Egyptians were living below the poverty line, according to the World Bank, with another 30 percent considered vulnerable to also falling into poverty.
Egypt, with more than 105 million people, has been dependent on bailouts in recent years, from both oil-rich Gulf allies and the International Monetary Fund.
According to Ministry of Planning figures, the country’s external debt bill has tripled over the past decade, rising to a record high of $165.4 billion this year.
Researcher Robert Springborg of the Italian Institute of International Affairs has blamed Egypt’s economic model, in which the military plays a key role, arguing it is based on “profligate borrowing for prestige projects with limited economic benefits”.
The crowning jewel of the government’s projects is the $58 billion New Administrative Capital that experts have called “a vanity project”.
