As of June, 80 per cent of vulnerable households did not have sufficient income to cover their monthly basic needs, up from 75 per cent in March 2012. Forty three per cent of those households cover their minimum needs by relying on pensions, assistance from the Government or families/community members. Although inflation rates have been moderate during 2012, food price levels remain high. The monthly inflation went up between July and August driven by 2.5 percent increase of food prices. Some of the most vulnerable households have ceased consumption of certain food items, with over 75 percent pointing out price increases as the main factor of households’ low purchasing power. Economic growth is likely to show some mild improvements between September and December 2012 as the confidence in the Egyptian market is expected to improve. Foreign investments might increase with the signing of the IMF loan to Egypt and the balance of payments is likely to improve compared to 2011/2012. On the downside, global food prices are expected to increase during the last quarter of 2012, leading to continued inflation of domestic food prices and increasing pressure on the fiscal budget. The exchange rate is expected to further depreciate.
October 2012