Ahmed Kamel – Egypt Daily News
Egypt’s annual urban inflation rate continued its downward trajectory for the third consecutive month in August 2025, reaching 12%, compared to 13.9% in July, according to the Central Bank of Egypt (CBE).
In its monthly inflation analysis report, the CBE attributed the slowdown primarily to falling prices of essential food items, along with a notable drop in fresh fruit and vegetable prices, which registered negative annual growth rates. However many Egyptians would disagree that food prices have fallen.
The annual inflation rate for food and beverages declined to 2.1% in August the lowest level since June 2021 down from 3.4% in July. Meanwhile, the annual inflation rate for non-food items also fell, registering 19% in August compared to 21.3% the previous month.
Core inflation which excludes volatile items such as food and energy also eased, falling to 10.7% in August from 11.6% in July. On a monthly basis, core inflation stood at 0.1%, down from 0.9% in August 2024.
The Central Bank said the deceleration in core inflation was largely due to declining prices of essential food commodities, which posted a negative monthly inflation rate for the third month in a row, at -0.3% in August 2025 versus -0.1% in August 2024. Prices of non-food goods also declined, notably due to lower air travel service prices.
The monthly urban headline inflation rate recorded a modest increase of 0.4% in August, compared to -0.5% in July 2025 and 2.1% in August 2024. This change reflects lower prices of both food staples and non-food items, despite seasonal increases in the prices of fruits and vegetables, which rose at a slower-than-usual pace for this time of year.
Rural and Nationwide Trends
Inflation in rural Egypt also showed signs of easing, with the annual rate falling to 10.5% in August from 12.4% in July. Nationwide, the general annual inflation rate dropped to 11.2% in August, down from 13.1% the month before.
Key Contributors to Monthly Inflation
Although inflation has eased overall, certain components still contributed upward pressure on the monthly index:
- Food Prices rose by 0.5% in August, contributing approximately 0.18 percentage points to the monthly headline inflation.
- Fresh Vegetables and Fruits saw a 4.8% monthly increase, following two consecutive months of decline. Vegetables rose 6.6%, while fruits increased 2.7%, jointly contributing 0.27 percentage points to the headline rate.
- Poultry Prices continued to fall for the third straight month, dropping 2.5% in August, aligning with seasonal trends and reducing monthly inflation by 0.12 percentage points.
- Dairy Products rose 0.4%, contributing 0.2 percentage points to the headline rate.
- Consumer Goods prices increased by 0.8%, contributing 0.11 percentage points, largely due to slight upticks in prices of household appliances, cleaning products, and personal care items.
Administered and Service Prices
Prices of goods and services with regulated pricing rose by 0.2% in August, adding 0.04 percentage points to the monthly inflation rate. This was primarily driven by:
- A 0.5% increase in cigarette prices
- A 0.2% rise in pharmaceutical product prices
Service prices saw a marginal rise of 0.1%, contributing another 0.04 percentage points. However, this was offset by steep declines in:
- Airfare (down 8.4%)
- Pilgrimage and Umrah travel costs (down 10.6%)
These decreases significantly counterbalanced rising costs in housing rentals and restaurant spending.
Core Inflation Drivers
The monthly core inflation rate of 0.1% reflected mixed dynamics:
- Essential food commodities contributed negatively, at -0.12 percentage points
- Consumer goods and services added 0.16 and 0.05 percentage points, respectively
Outlook
The sustained decline in inflation, especially in core and food-related components, signals a potentially stabilizing trend in Egypt’s consumer price dynamics. However, volatility in global commodity markets, domestic supply chain pressures, and seasonal patterns may continue to influence inflation readings in the months ahead.
The Central Bank of Egypt is expected to closely monitor these developments as it prepares for its upcoming monetary policy decisions.
