Egypt Raises Inflation Rates For Third Time In 2008

Cairo, Egypt (AHN) - In another attempt to contain inflation rates in Egypt, the Central Bank on Saturday raised key lending rates, it was the third time this year. The decision comes after expectations that inflation will continue to rise after recent government hikes in fuel and cigarettes.

The Central Bank has already raised interest rates this year, by 50 points in March and another 25 in February in attempts to stem out of control inflation hitting the North African nation.

"Despite tentative signs of moderation in international wheat prices, the domestic inflation outlook is affected by the latest regulated price adjustments," the bank said in a statement released with the rate hikes.

The move comes as Egypt's Parliament approved the passage of increases in the cost of fuel and cigarettes as well as vehicle licensing fees. The Parliament said the tax increases would help cover the costs of a public-sector salary raise President Hosni Mubarak promised ahead of a May 4 general strike over low wages and high prices.

The Central Bank added that the price rises and the consequent second round effect "pose an upside risk to inflation prospects."

The bank said it plans to monitor the situation closely in the near future in order to help stem inflation.