Egypt: Inflation decelerated further in July
Inflation eased for a fifth consecutive month in July, coming in at 25.7%, down from June’s 27.5%. July’s reading represented the weakest inflation rate since December 2022. Looking at the details of the release, the moderation was primarily due to a softer increase in prices for food and non-alcoholic beverages—the largest consumer price index basket component.
Accordingly, the trend pointed down, with annual average inflation coming in at 32.3% in July (June: 33.3%). Meanwhile, core inflation fell to 25.0% in July from the previous month’s 26.6%.
Finally, consumer prices rose 0.41% from the previous month in July, which was below June’s 1.56% rise.
Our panelists expect inflation to average lower in the second half of calendar year (CY) 2024 than in the first half. However, upside risks to the outlook linger: Additional waves of subsidy cuts—like 1 June’s 300% hike in subsidized bread price, the 15% increase in a range of fuel products and the up to 40% increase in tariffs on residential electricity from 1 September—as part of a bailout agreement with the IMF are likely going forward, exerting upward pressure.
Overall in CY 2024, inflation will only slow slightly from the prior calendar year. Inflation is expected to remain above the upper bound of the Central Bank of Egypt (CBE)’s 5.0–9.0% target band until CY 2027. If the CBE—as it claims it wants to do—lowers the upper bound of this range to 7.0% in CY 2025, inflation will remain above target beyond CY 2027.