Egypt’s annual inflation rate declined to 23.4 percent in December 2024 from 25 percent in November, primarily due to a notable decline in food prices. The latest figures from the Central Agency for Public Mobilization and Statistics (CAPMAS) revealed a 1.7 percent decline in prices in the food and non-alcoholic beverage category.
The most notable decline was in vegetable prices which saw a 14 percent dip last month. Prices of milk, cheese and eggs, fish and seafood and meat and poultry also witnessed declines in December. Meanwhile, clothing and footwear prices rose 1 percent and housing, water, electricity, gas and other fuel prices gained 0.9 percent.
Furnishings and household equipment prices rose 0.7 percent, healthcare prices gained 3.7 percent and transport prices rose 0.5 percent. In addition, prices in the communications sector rose a notable 10.2 percent, recreation and culture prices gained 0.2 percent and prices at restaurants and hotels rose 0.9 percent.
Improved economic conditions support inflation dip
Inflation in Egypt has been on a downward trend since the announcement of the Ras El Hekma deal last year. Headline inflation climbed to a record high of 38 percent in September 2023 after falling to 25 percent in November. Inflation in Egypt began rising in early 2022 following Russia’s invasion of Ukraine, which prompted foreign investors to withdraw billions of dollars from Egyptian treasury markets. The UAE’s Ras El Hekma investment, along with other reforms enabled Egypt to begin recovering from the economic slowdown it was witnessing.
Egypt’s economy is expected to grow between 3.5 percent and 4.5 percent in 2025 as the country continues to implement major reforms to increase investments and decrease inflation. The International Monetary Fund expects the Egyptian economy to grow 4 percent in 2025 compared to an expected growth of 2.7 percent in 2024. Meanwhile, the World Bank expects Egypt’s economy to grow by 3.5 percent and 4.2 percent in 2025 and 2026, respectively.
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Net foreign reserves rise
As inflation continued to decline, Egypt’s net foreign reserves increased to $47.109 billion in December, up from $46.952 billion in November, according to recent data from the central bank. This upward trend began in June, when the reserves grew from $46.126 billion in May to $46.3 billion, following increases from $41 billion in April and $40.4 billion in March.
Egypt attributed the growth in reserves to a surge in investments throughout the nation, alongside international financial assistance packages. Notably, a significant $35 billion deal with the UAE regarding Ras El-Hekma, signed in February, marked the largest foreign direct investment agreement in Egypt’s history. Following this agreement, Egypt’s net international reserves experienced an increase of $11.2 billion over a span of five months.
In addition, Egypt has secured over $57 billion in financial packages from international financial institutions and development partners. In July, it received its third tranche of the $8 billion loan program from the IMF following the successful completion of the third review. Furthermore, during the Egypt-EU investment conference, an agreement was reached for a €1 billion deal as part of the €7.4 billion pledged to Egypt by the European Union.
