By: ThinkBusiness Africa
The North African nation’s battle against persistent price pressures saw a mixed report in November, as the Central Bank of Egypt (CBE) announced on Wednesday an acceleration in the annual Core Inflation Rate to 12.5%, up from 12.1% in October.
This acceleration in underlying price pressures comes despite the headline Urban Inflation Rate easing slightly, creating a new challenge for the CBE’s Monetary Policy Committee (MPC) ahead of its crucial December meeting.
While the main focus of public discussion, the Annual Urban Headline Inflation Rate, eased to 12.3% in November, down from the four-month high of 12.5% recorded in October, the rise in the core measure suggests that price stability remains elusive.
The core inflation figure, which strips out volatile items like fresh fruits and vegetables, as well as administered prices such as fuel, is a key indicator of persistent, broad-based price changes in the economy.
The monthly figures show a sharp decline in the overall price index, primarily driven by a fall in volatile food and beverage prices, which helped pull the headline rate down. However, the rise in core inflation signals that costs for non-food items, including services, clothing, and other manufactured goods, are continuing to climb at a faster pace.
The mixed inflation report provides a complicated backdrop for the CBE, which aims to steer inflation towards its medium-term target of 7% by the end of 2026.
The easing of the headline rate to 12.3% and the sharp drop in the monthly figure (to 0.3%) provide some scope for the MPC to resume the easing cycle it paused in November. A lower headline rate strengthens the case for a reduction in the benchmark overnight deposit rate, currently at 21.00%.
Meanwhile, core inflation at 12.5% presents a major counter-argument. It suggests that underlying, second-round effects—where administered price hikes, like the October fuel price increase, spill over into the cost of transport, services, and general manufacturing—are still taking hold.
The MPC, which held rates steady at its previous meeting after delivering 625 basis points of cuts between April and October, will now have to carefully weigh the short-term relief from food prices against the growing structural pressures implied by the core measure.
The decision at the final MPC meeting of the year, scheduled for December 18, 2025, is now more finely balanced than ever. Economists are divided, with some expecting a modest rate cut to support economic growth, and others predicting another hold to solidify the anti-inflationary posture.
