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Thndr Claps » Thndr Thinkers💭 » Economics » Is inflation in Egypt an illusion?

Is inflation in Egypt an illusion?

by Thndr Thinker
June 2, 2022

Business and finance community, Greetings to you,

Of course, no talk is more prominent than that of inflation and its fate on the economy and citizens. Inflation, as defined by the IMF, is the continuous increase in prices over a certain period of time, and it means the weakening of the purchasing power of the country’s local currency.

Do you think that inflation in Egypt is normal, and is it a real indication of the rise in commodity prices against the local currency?
To answer this question we will need to look at the correlation of pricing to the dollar. Most of the goods are either imported or locally made. The imported price is directly linked to foreign currencies and therefore to the dollar in one way or another. As for local goods, their correlation is either because part of them is exported abroad, so the local part is priced on the basis of abroad, or it is not directly related to the currency, but is linked to production inputs, which are directly related to the currency price since they are partially or completely imported from abroad.

Of course, some prices have recently risen several times and even exceeded expectations, driven by fear of a future rise in prices or lack of production inputs in the exhibition or any expectations due to the Russian war and the pandemic. There are a lot of goods that are overpriced for fear of raising or manipulating their supply.

What is the effect of inflation on stocks?
In these difficult times, investors go to safe havens such as stocks. Investing in stocks makes the investor’s money revolve in the natural business cycle in products and thus ensures that he makes a profit in one way or another and retains the real value of his money during market fluctuations.

Many of the current Egyptian stocks are distinguished and successful despite the violent fluctuations in the market, which come from the war and the pandemic. The entire region is located in the belt of wars that have been going on for some time in several countries. Of course, the next stage will witness an improvement in the investment climate and the legal frameworks that support it, thus improving the performance of companies and making investors profit from their investments in the market.

  • This is not investment advice, & you should do your own research before making investment decisions
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