Egypt's Inflation Dynamics Shift, Demand Pull Inflation Still Key Player
The study looked at how inflation in Egypt has changed over time compared to global trends. They used a model to analyze inflation patterns in Egypt from the 1980s to 2009. The researchers found that inflation in Egypt has become more persistent since 2000, with inflation shocks lasting longer and affecting future inflation rates. Demand-driven inflation remains a key factor, explaining 30% of inflation changes. Inflation in Egypt has also become more responsive to supply side shocks since 2006. Similar to global trends, the relationship between inflation and output gap in Egypt has flattened, showing that other factors now play a bigger role in determining inflation rates.