Egypt Daily News – The Central Agency for Public Mobilization and Statistics (CAPMAS) has announced that Egypt’s annual inflation rate reached 16.5% by the end of May 2025. The increase reflects continued economic pressures, including rising food prices, currency devaluation, and global economic instability.
Despite the rise, economists, including those from Abu Dhabi Commercial Bank (ADCB) and EFG Hermes, view the increase as temporary and expect inflation to continue its downward trend. This comes after a significant decline from a record inflation rate of 38% in September 2023, aided by an $8 billion IMF support package signed in March 2024 .
The Central Bank of Egypt has responded by cutting interest rates, lowering the overnight lending rate by 225 basis points in April and by another 100 basis points in May, with further potential easing expected at its next meeting on July 25 .
Key Drivers of Inflation
The increase in inflation is primarily driven by higher food and energy prices. The food and beverage sector recorded a 4.2% year-on-year increase in prices last February, whereas the alcoholic drinks and tobacco sector registered an annual growth of 26.8%. The housing, water, electricity, natural gas, and fuel sector saw a 17.03% year-on-year surge in prices .
Economic Outlook
Economists have revised down Egypt’s economic growth forecasts for the current and next fiscal years, citing global tariff concerns and weaker global economic performance, particularly due to U.S. tariff policies. A Reuters poll of 17 economists conducted between April 9 and 23, 2025, now predicts Egypt’s gross domestic product (GDP) will grow 3.8% in the fiscal year ending June 30, down from a 4.0% forecast in January. Growth in 2025/26 is also adjusted to 4.6% from a previous 4.7% .
Despite these challenges, Egypt’s economy is projected to grow by 4.0% by the end of June 2025 as it recovers from austerity measures under an IMF program. The growth is expected to rise to 4.7% in 2025/26 and 5.3% by 2026/27 .
Inflation Targets
The Central Bank of Egypt aims to bring headline inflation down to an average of 5% (±2 percentage points) by the fourth quarter of 2026 .
