The annual general inflation rate in urban areas rose to 5.7% in August 2021 compared to 5.4% in July 2021, and 4.9% in June 2021. At the same time, the annual rate of core inflation decreased slightly to 4.5% in August 2021 compared to 4.6% and 3.8% in July and June 2021, respectively.
The rise in annual general inflation rates in July and August 2021 comes as a result of the negative impact of the base period, as inflation rates in July and August 2020 reflected the impact of the spread of the emerging Corona Virus pandemic and the accompanying precautionary measures on the level of inventory and consumption pattern.
Consequently, the rise in the annual general inflation rate in July and August 2021 came mainly as a result of the increase in the annual contribution of food commodities. The annual rate of food inflation rose for the fourth consecutive month to 6.6% in August 2021 from 4.8% in July 2021.
This was partially limited by the decline in annual inflation of non-food items to 5.3% in August 2021 from 5.7% in July 2021, the lowest recorded rate since April 2014.
Preliminary data indicate that the real GDP growth rate recorded 7.7% during the second quarter of 2021, reflecting the continued recovery of economic activity, continuing its upward trend from the lowest rate recorded during the same period last year at negative 1.7%. The recovery is due to the positive impact of the base year compared to the contraction over the past year.
Thus, the growth rate recorded 3.3% during the fiscal year 2020/2021, which is higher than the previous estimates of 2.8% for the same fiscal year and compared to 3.6% during the last fiscal year.
In addition, preliminary indicators point to a strong and continuous improvement in most economic sectors. On the other hand, the unemployment rate stabilized at 7.3% during the second quarter of 2021, compared to 7.4% during the first quarter of 2021.
At the global level, economic activity continued to recover, albeit to varying degrees at the level of different sectors and countries, as a result of the disparity in vaccination rates against the Corona virus between countries.
In addition, the recovery of global economic activity depends on the developments of the spread of the Corona virus pandemic and the ability of some countries to contain the spread of the pandemic, especially in light of the emergence of new strains of the Corona virus.
The financial conditions continued to support global economic activity. The expectations of Brent crude oil price have also stabilized in general, while international prices of food commodities and some other primary commodities continued to record high levels compared to previous years.
In light of the above, the Monetary Policy Committee decided that the basic interest rates at the Central Bank are appropriate at the present time, and are consistent with achieving the target inflation rate of 7% (± 2 percentage points) on average during the fourth quarter of 2022 and price stability in the medium term. .
The Monetary Policy Committee will closely follow all economic developments and risk balances and will not hesitate to use all its tools to support the recovery of economic activity provided that inflationary pressures are contained.
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