Inflation continues to witness sharp decline, urban inflation slows to lowest level since Jan 2023

Egypt’s annual headline inflation rate experienced a significant decrease in May, falling to 27.40% from 31.80% in April, according to recent data released by the Central Agency for Public Mobilization and Statistics (CAPMAS).

The decline marks a continuing trend, as April witnessed a 1.30% decrease in the annual headline inflation rate from 33.10% in March.

CAPMAS data revealed that May inflation was primarily fueled by a 28.90% year-on-year (YoY) increase in the food and beverage sector, driven by a 26.60% YoY uptick in meat and poultry prices.

Urban inflation showed a sharp decline in May compared to April’s 32.5%, dropping to 28.1%, the lowest level since January 2023 when it recorded 25.8%.

The slowdown was attributed to a 3% monthly decline in food and beverage prices, the largest component of the inflation basket.

Breaking down the inflation data, the statistics agency highlighted various increases in price across different groups.

Grains and bread prices rose by 15.3% annually, while meat and poultry prices increased by 26.2%. Dairy, cheese, and eggs saw a significant spike of 38.6%, while fruits and vegetables rose by 57.3% and 31.9%, respectively. Sugar and sugary foods increased by 31.2%, and coffee, tea, and cocoa surged by 41.4%.

Egypt’s significant downtrend of inflation rates has defied economists’ estimates stemming from concerns related to the EGP’s devaluation.

As part of efforts to curb inflation, Egypt recently implemented a 300% hike in subsidized bread costs effective from June 1.

The Central Bank of Egypt had previously raised interest rates by 6% in March, aiming to control inflation following the devaluation of the pound's exchange rate against the dollar.

Looking ahead, the Central Bank aims to achieve an inflation rate averaging 7% (± 2 percentage points) during the fourth quarter of 2024.