Egypt’s inflation eases as food prices drop, but some costs continue to rise

Egypt’s urban inflation rate fell to 13.9% in July, down from 14.9% in June, signaling a modest improvement in the country’s economic conditions. The monthly inflation rate also saw a more pronounced decline, dropping to -0.6% compared to -0.1% in the previous month, indicating a broader reduction in prices.

The Central Agency for Public Mobilisation and Statistics (CAPMAS) reported that the national Consumer Price Index (CPI) reached 256.5 points in July, marking a 0.6% decrease from June.

The agency attributed this decline primarily to falling food prices, with significant drops in meat and poultry (-4.9%), fruits (-11%), and vegetables (-7%). Additionally, personal effects saw a 0.5% price reduction.

Mixed trends: some Goods see price hikes despite overall decline

While food prices largely contributed to the easing of inflation, several categories experienced increases.

Cereals and bread rose by 0.4%, fish and seafood by 0.2%, and dairy products, including cheese and eggs, also edged up by 0.2%.

Oils and fats increased by 0.1%, while sugar, coffee, tea, and cocoa each climbed by 0.2%.

Non-alcoholic beverages, including mineral water and natural juices, rose by 0.8%, but the most dramatic surges were seen in alcoholic beverages (+5.3%) and tobacco (+7.8%).

Beyond food, other sectors also recorded price hikes.

Fabric prices increased by 0.4%, ready-made garments by 0.3%, and footwear by 0.2%.

Housing-related expenses also rose, with actual rents up by 0.8% and home maintenance costs jumping by 1.7%.

Household goods saw notable increases, with furnishings rising by 2.6%, appliances by 0.6%, and tableware and utensils by 1.2%.

Service sectors were not spared, as outpatient and hospital services rose by 0.8% and 1.1%, respectively.

Transportation costs climbed by 0.3%, while hotel services surged by 1.5%.

National inflation dips to 13.1%, CBE predicts gradual decline

On a national level, annual inflation eased to 13.1% in July from 14.4% in June.

The Central Bank of Egypt (CBE) expects inflation to stabilize near current levels for the remainder of 2025 before gradually declining through 2026.

The bank has set a target of 7% (±2%) by the end of 2026.

Core inflation, which excludes volatile items like food and energy, recorded -0.3% monthly in July 2025, compared to -0.5% a year earlier.

Annually, core inflation edged up slightly to 11.6% from 11.4% in June.

CBE adjusts inflation forecast amid lingering risks

In its Q2 2025 Monetary Policy Report, the CBE revised its inflation projections, now expecting rates of 15–16% for 2025 and 11–12% for 2026—a significant improvement from the 28.3% peak in 2024.

However, the bank cautioned that risks remain, including slower adjustments in service prices and potential impacts from fiscal consolidation measures.

Since 2017, the CBE has adopted a flexible inflation-targeting framework to stabilize price expectations and mitigate supply shocks.

In December 2024, it set inflation targets of 7% (±2%) for Q4 2026 and 5% (±2%) for Q4 2028.

The Monetary Policy Committee meets eight times a year to adjust interest rates and guide inflation strategy.

The CBE employs various tools, including deposit and lending rates, reserve requirements, and auctions, to maintain price stability.

As Egypt navigates economic challenges, the latest data offers cautious optimism, though persistent price pressures in key sectors suggest the road to full stabilization remains uneven.