Egypt’s annual urban consumer price inflation continued its steady decline in August, slowing to 12% from 13.9% in July, according to data released on Wednesday by the statistics agency CAPMAS. The figure came in below the 12.7% forecast by a Reuters poll, signaling that the government’s economic reforms and monetary tightening policies are successfully cooling the economy.
The latest reading marks a significant milestone in the North African nation’s fight against inflation, which peaked at a record 38% in September 2023. This sustained downward trajectory has been supported by a series of measures, including a landmark $8 billion financial support package from the International Monetary Fund (IMF) signed in March 2024. The package was aimed at restoring stability and fiscal discipline.
In a move widely seen as a direct response to the positive inflation data, the Central Bank of Egypt (CBE) cut its overnight lending rate by 200 basis points on August 28, marking the third such reduction this year. This policy shift indicates a growing confidence from the CBE that inflationary pressures are under control, potentially paving the way for further easing of monetary policy to stimulate economic growth.
The deceleration in prices was broad-based, with significant slowdowns observed in key sectors. While the detailed breakdown for August is pending, data from July showed a sharp moderation in food prices—a crucial component of the CPI—as well as slowing increases in transport, clothing, and restaurant services. This suggests the anti-inflationary trend is rooted in a fundamental cooling of consumer prices rather than temporary factors.####
