Egypt Daily News – Egypt’s annual urban inflation rate slowed in June to 14.9%, down from 16.8% in May, marking the first decline in three months and easing some pressure on the country’s economic policymakers ahead of a key interest rate decision on Thursday.
According to data released Wednesday by Egypt’s Central Agency for Public Mobilization and Statistics (CAPMAS), the slowdown was primarily driven by a deceleration in food and beverage prices, the largest component of the inflation basket which rose 6.9% year-on-year, compared to 11.2% in the previous month.
On a monthly basis, consumer prices declined by 0.1% in June, reversing a 1.9% increase recorded in May.
Central Bank Still Cautious Despite Easing Pressures
In its last interest rate decision on May 22, when it cut rates for the second time in 2025, the Central Bank of Egypt (CBE) projected continued disinflation through the remainder of the year and into 2026. This outlook was supported by slowing headline and core inflation, as well as a decline in underlying inflationary pressures.
However, the central bank cautioned that upside risks to inflation remain due to persistent global challenges, including trade protectionism, escalating regional conflicts, and fiscal consolidation measures that have exceeded earlier forecasts.
Much of this year’s inflationary pressure has stemmed from domestic policy decisions. In April, the Egyptian government raised fuel prices for the second time in six months, aiming to save 35 billion Egyptian pounds in the 2024–2025 fiscal year. The hikes affected all types of gasoline and diesel, with an average increase of around two pounds per liter.
Earlier in 2024, the central bank raised interest rates to a record high to combat soaring inflation, which had exceeded 30% at the time, and to address severe foreign currency shortages. It also devalued the Egyptian pound by roughly 40% against the U.S. dollar, a move aimed at securing a $57 billion rescue package from the United Arab Emirates, the International Monetary Fund, and other partners.
Since then, Egypt’s inflation-adjusted interest rates have become among the highest in the world, helping attract foreign investors back into the local debt market.
