UPDATE 1-Egyptian urban inflation eases on food prices

Thu, Jan 8 2009, 09:11 GMT
http://www.afxnews.com

CAIRO, Jan 8 (Reuters) - Urban consumer inflation in Egypt dipped to an eight-month low in December as food prices retreated, improving the prospects for an interest rate cut.

Prices in urban areas rose 18.3 percent in the year to December, according to figures from the state statistics agency CAPMAS, obtained by Reuters on Thursday.

The figure compares to 20.3 percent in the year to November. Countrywide inflation figures were not immediately available.

Food prices declined 2.9 percent from the previous month.

The central bank, which ended a nine-month cycle of interest rate rises in November, has kept rates on hold for two straight meetings since, even as inflation has begun to ease.

"The outturn increases the probability that the Central Bank of Egypt will cut policy rates at its next meeting in February," Cairo-based investment bank EFG-Hermes said in a note to clients.

The urban consumer price index dropped 1.3 percent compared to the previous month.

(Writing by Will Rasmussen) Keywords: EGYPT INFLATION

(william.rasmussen@reuters.com; +20 2 2578 3290/1; Reuters Messaging: william.rasmussen.reuters.com@reuters.net)

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