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Jan 10, 10:56 AM EST

Egypt's inflation drops as economic reforms take effect


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CAIRO (AP) -- Egypt's inflation dropped to 21.9 percent in December, down from nearly 26 percent the month before, marking its lowest level since the currency was floated in November 2016, according to figures released Wednesday.

The numbers published by the Central Bank of Egypt also showed that year-on-year core inflation declined to 19.86 percent in December, down from 25.54 percent in November. Core inflation excludes volatile commodities such as food and energy.

The inflation rate peaked over the summer after the government raised fuel prices by up to 55 percent and electricity prices by more than 40 percent. It had also doubled the price of household gas canisters. Inflation largely hovered around 30 percent in 2017.

Dubai-based Arqaam Capital said the decline in inflation reflects the "strong positive base effect" following the currency float, part of broader economic reforms taken to meet demands by the International Monetary Fund for a $12 billion bailout loan. It expects inflation to decline to 18 percent in January.

The currency floatation and austerity measures, aimed at rebuilding the economy after years of unrest, have hit poor and middle class Egyptians especially hard.

President Abdel-Fattah el-Sissi, who led the 2013 military overthrow of an elected but divisive Islamist president, has urged Egyptians to be patient as the reforms take effect. In September he said the government would aim for around 13 percent inflation in 2018.

El-Sissi has yet to formally announce his candidacy, but is virtually certain to run for and win a second four-year term in elections set for March. He faces no realistic challengers, and authorities have silenced virtually all public criticism of the government.

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