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Egypt central bank publishes core inflation index

Egypt’s central bank began publishing a core inflation index , a move seen as increasing transparency about monetary policy in a country where price rises peaked at more than 20 percent in 2008.

The bank has, since 2006, used but not published the index, which strips out subsidised goods and volatile items such as food and energy.

Economists have said food price rises have been propping up urban inflation, the most widely watched inflation indicator in Egypt. Energy and some food items are subsidised in Egypt.

“You can analyse the core inflation and from there analyse future inflation,” Deputy Governor Hisham Ramez told a news conference in Cairo to announce the core inflation figure.

Rania al-Mashat, head of monetary policy division at the central bank, said launching the index did not mean the bank would ignore growth as it sought to control price rises.

“Targeting price stability does not mean that we will overlook growth,” she said. “We are seeking economic growth as well as lowering inflation rates to the bank’s comfort zone.”

The bank does not reveal its “comfort zone.” The economy grew more than 7 percent before the economic downturn, but has since slowed. However, the government still expects growth of more than 5 percent in 2009/10.

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