Egypt Independent

Inflation jump would be risk to Egypt outlook, says analyst



London–Any rise in Egyptian inflation could present a risk to Egypt's stable ratings outlook, a senior analyst at Fitch Ratings said on Wednesday.

"If I see inflation rising sharply, that would increase the risks," Richard Fox, head of Middle East and Africa sovereign ratings at Fitch, told Reuters.

Fitch affirmed Egypt's BB+ rating with stable outlook earlier this month, but said inflation was a challenge.

Egyptian urban inflation, the most closely watched indicator of prices, rose to 10.3 percent in the 12 months to December.

Dozens of Egyptian protesters gathered in central Cairo on Wednesday, a day after unprecedented demonstrations that called for an end to President Hosni Mubarak's 30 years in office.

Rising food prices are one of the key factors behind protests in a number of countries in the Middle East and North Africa, causing the president to flee in Tunisia.

"Egypt is less likely to spiral out of control than Tunisia, but the key question is the momentum (of the protests)," said Fox.

"Inflation is a problem in Egypt, and food inflation in particular."