Egypt’s annual urban consumer price inflation rate declined to 25.5 percent in November, its lowest since December 2022, according to the latest data from the Central Agency for Public Mobilization and Statistics (CAPMAS). Month-on-month, headline inflation rose by 0.5 percent in November, down from 1.1 percent in October, mainly due to a 2.8 percent decline in food prices.
Headline inflation climbed to a record high of 38 percent in September 2023 after falling to 26.5 percent in October. 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.
Consumer price index declines 0.1 percent
Egypt’s consumer price index (CPI) in November recorded 239.8 points, marking a slight monthly decline of 0.1 percent compared to October. The agency attributed this decrease primarily to substantial reductions in the prices of specific food items, which offset price hikes in other sectors. Prices of vegetables fell sharply by 12.4 percent, while meat and poultry declined by 3 percent.
However, the transportation sector recorded a 6.2 percent rise in prices while cultural and recreational services experienced one of the largest increases at 13.3 percent.
Overall inflation falls to 25 percent
Year-on-year, Egypt’s overall inflation rate fell to 25 percent from 26.3 percent in October. The food and beverages category witnessed significant annual increases, with fruit prices rising 32.7 percent, vegetable prices rising 27.8 percent, and oils and fats rising by 16.1 percent.
Transportation costs also rose by 37.6 percent compared to November 2023, driven by a 44.2 percent increase in public transport services. Cultural and recreational services saw a 48.5 percent surge in prices, mainly due to a 62.7 percent increase in books and stationery. Housing and utility costs also increased by 21.8 percent, driven by a substantial 49.3 percent rise in electricity, gas and fuel prices.
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Central bank keeps interest rates unchanged
Earlier this month, Egypt’s central bank kept its overnight interest rates unchanged. “Considering developments at the domestic and global levels, the committee views the current monetary policy stance as appropriate until a significant and sustained decline in inflation materializes,” said the central bank in a statement.
Leading indicators for Q3 of 2024 pointed to Egypt’s real GDP growing at a faster pace compared to the 2.4 percent growth in Q2 2024. Egypt’s central bank expects economic activity to continue rising. However, it noted that estimates indicate that real GDP remains below potential.
Looking ahead, Egypt’s central bank expects inflation to persist near current levels till the end of 2024 with the balance of risks still tilted to the upside. These risks include geopolitical tensions, possible trade protectionism, and higher than anticipated pass-through of fiscal measures. Nevertheless, inflation is projected to ease starting Q1 of 2025, as the cumulative impact of monetary policy tightening and favorable base effect materialize.
