Egypt’s Inflation Eases to 23.4% Amid Stabilizing Prices
Key Drivers of Inflation Decline
The Central Agency for Public Mobilisation and Statistics (Capmas) attributed the inflation decline primarily to a 14% drop in vegetable prices, alongside marginal decreases in dairy, cheese, and eggs (0.7%) and fish and seafood (0.6%). However, certain sectors saw price increases, with telephone and fax services rising by 11%, fruit by 7.5%, and medical products by 5.5%.
On a monthly basis, the inflation rate remained flat in December, following a slight 0.1% decline in November, signaling a stabilisation in prices after a three-month period of rising inflation.
Economic Outlook and Policy Implications
The inflation slowdown, although modest, may give the Central Bank of Egypt room to ease monetary policy in the coming months. This could support economic growth amid ongoing challenges. The bank has set an ambitious target to bring inflation down to 7% by the end of 2025 and is set to review interest rates on January 20.
Egypt’s economic reforms remain central to its $8 billion loan agreement with the International Monetary Fund (IMF). The deal requires Egypt to adopt a flexible exchange rate, reduce fiscal deficits, and bolster social protection measures. As part of the program, Egypt secured a staff-level agreement in December for a $1.2 billion disbursement, bringing the total IMF funding to $4.4 billion.
Challenges and Reforms
Egypt has faced a series of economic disruptions, including the Covid-19 pandemic, geopolitical conflicts such as the Gaza crisis and the Russia-Ukraine war, and global economic pressures. To address these challenges, the government has allowed the Egyptian pound to depreciate and is phasing out subsidies on fuel and food.
The IMF has urged Egypt to accelerate reforms aimed at reducing the state’s role in the economy, improving the business environment, and enhancing private sector confidence to attract foreign investment.
Looking Ahead
With inflation showing signs of stabilisation and the IMF-backed reforms underway, Egypt may be on the cusp of achieving greater economic stability. However, sustained efforts will be required to navigate global uncertainties and ensure long-term growth.
