UPDATE -Egypt’s annual core, urban inflation rise in May

 Egypt's annual urban consumer inflation and core inflation both rose on Wednesday, driven in large part by rising food prices.

Urban consumer inflation rose to 13.1 percent in May from 11 percent in April, the official statistics agency CAPMAS said.

Core annual inflation, which excludes volatile items like fruit and vegetables, rose to 8.14 percent in May from 7.19 percent the previous month, the central bank said.

Inflation accelerated in Egypt after the government slashed subsidies in July last year, pushing up fuel prices as much as 78 percent. Price pressures eased at the end of the year but have since picked back up.

"The jump in Egyptian inflation to 13.1 percent year on year in May was almost entirely driven a sharp rise in food inflation and, as a result, we don't expect it to have an impact on the MPC's rate decision tomorrow," Capital Economics said in a research note.

"But equally, it means that the chances of the central bank cutting rates later this year have now diminished."

Four of five economists surveyed by Reuters said they expect the central bank to keep interest rates on hold on Thursday when its monetary policy committee meets.

The bank kept its benchmark interest rates on hold at its last meeting in April, saying it had balanced improved economic growth in the second half of last year against accelerating inflation from volatile food items.

Finance Minister Hany Dimian said on Monday he expected inflation would slow to single digits within the next two or three years once a reform agenda had been implemented.

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