Egypt’s inflation rebounds to 12.5% in October, ending four-month easing trend

By: ThinkBusiness Africa

Annual consumer price inflation (CPI) in the North African nation unexpectedly accelerated to 12.5% in October, up from 11.7% in September, according to data released Monday by the Central Agency for Public Mobilization and Statistics (CAPMAS). The increase halts a four-month streak of moderating prices and places fresh pressure on household budgets and the Central Bank of Egypt’s (CBE) monetary policy.

The acceleration was primarily driven by increases in two major, non-core components of the CPI basket: fuel and housing.

A critical factor was the government’s decision in mid-October to raise domestic retail fuel prices, marking the second such adjustment in 2025. This increase, which averaged around 13% for key products, immediately fed into the transportation and distribution sectors.

The price movement drove a sharp increase in the CPI’s transport component, reflecting the increased cost of moving goods and people across the economy.

Housing and utilities costs continued their upward trajectory. A new law that allows landlords greater flexibility in raising monthly rents is filtering through the economy, significantly contributing to the inflation rate given the high weight of housing in the overall CPI.

The CAPMAS data also indicated a substantial rise in monthly food costs, a crucial category affecting lower-income segments.

The monthly CPI rose by 1.8% in October, compared to a 0.4% rise in August, indicating renewed monthly price momentum.

The acceleration in inflation complicates the Central Bank of Egypt’s (CBE) strategy. The CBE has recently adopted a more accommodative stance, having implemented several interest rate cuts throughout 2025 (including a 100-basis-point reduction in early October and 200 basis point reduction in August), based on expectations of a sustained disinflationary path.

The target for annual headline inflation is 7% on average in fourth quarter (Q4) 2026. The October data introduces significant “upside risks” to this forecast, likely forcing the Monetary Policy Committee (MPC) to reassess the speed and scope of future rate cuts.

The inflation rebound directly impacts the purchasing power of Egyptian households. With administered prices, such as fuel and housing, serving as key drivers, the rise is felt across essential goods and services. While the current 12.5% rate remains well below the peak of 38% recorded in September 2023, the reversal of the disinflation trend is a clear sign that price pressures remain persistent and broad-based.