Egypt’s annual urban consumer price inflation surged to 16.8 percent in May, up from 13.9 percent in April, according to data released by the statistics agency CAPMAS on Wednesday. This increase in headline inflation exceeded Reuters’ median forecast, which anticipated a rise to 14.9 percent based on the analysis of 12 experts, primarily driven by an adverse base effect.
Annual inflation has significantly reduced from a record high of 38 percent in September 2023, aided by an $8 billion financial support package signed with the IMF in March 2024.
The decline in inflation prompted the Central Bank of Egypt to lower its overnight lending rate by 225 basis points to 26.0 percent during its meeting on April 17, followed by another reduction of 100 basis points on May 22.
Read more: Egypt reports record primary surplus of GDP at 3.1 percent from July to April 2025
Recent rate cuts
In May 2025, Egypt’s central bank cut its overnight interest rates by a less-than-expected 100 basis points, referencing an acceleration in economic growth during the first quarter alongside a slowdown in inflation. The Monetary Policy Committee (MPC) adjusted the overnight deposit rate to 24 percent and the lending rate to 25 percent, marking its second reduction this year after maintaining steady rates for a full year.
Annual headline inflation nearly halved in February to 12.8 percent, largely due to a base effect following Egypt’s receipt of a $24 billion real estate investment from the United Arab Emirates and the signing of an $8 billion financial support program with the International Monetary Fund. Since then, inflation has steadily increased, reaching 13.9 percent in April. “Inflation is expected to continue declining throughout the remainder of 2025 and 2026, albeit at a constrained pace given the expected drag from implemented and planned fiscal consolidation measures in 2025, in addition to the relative persistence of non-food inflation,” the statement noted.
