Inflation Dynamics in Egypt: Structural Determinants versus Transitory Shocks



Diaa Noureldin

This roundtable discussed the findings of a study conducted by ECES aiming at identifying the causes of the upward inflationary trend in Egypt, focusing on the period from 2000 to 2018. According to the study, the structural causes of inflation in Egypt are attributed to mainly increased relative prices and money growth compared to the economy needs in order to finance the budget deficit rather than price shocks such as exchange rate liberalization or increased energy prices. The study recommended establishing rules for public finances of the state such as setting a ceiling for public debt and budget deficit to avoid increasing the money supply to cover this deficit. It also recommended developing an integrated plan to liberalize administered prices and study the best form of liberalization whether progressively or one-off, calling for an integrated inflation targeting policy.

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