Egypt: Inflation unexpectedly falls in March
Inflation eased to 33.4% in March, below February’s 35.7%. March’s moderation surprised markets, as an acceleration had been anticipated following the recent plunge of the pound against the USD; the Central Bank recently floated the currency. Looking at the details of the release, the cooling of price pressures was primarily due to a softer rise in prices for food and non-alcoholic beverages. In addition, price pressures for transportation also rose at a slower rate.
Still, the trend was unchanged, with annual average inflation coming in at February’s 34.4% in March. Meanwhile, core inflation fell to 33.7% in March, from February’s 35.1%.
Finally, consumer prices rose 0.98% over the previous month in March, moderating from the record-high of 11.35% increase logged in February. March’s result marked the weakest reading since August 2022.
Our Consensus is for average inflation to gradually moderate through calendar year 2028. However, our panelists do not expect average inflation to fall back within the Central Bank of Egypt’s 5.0–9.0% target band before the end of our forecast horizon in Q4 2025; a weak pound, 1 March’s 50% minimum wage hike and the government’s recent move to raise petrol and diesel prices will continue to drive price pressures for some time.