CAPMAS: Egypt’s Urban Inflation Slows to 11.7%

Annual inflation in Egypt’s urban areas eased to 11.7% in September, down from 12% in August, according to new data released by the Central Agency for Public Mobilization and Statistics (CAPMAS) on Wednesday.

The figure aligns closely with a market consensus revealed in a recent CNBC Arabia survey, in which economists and analysts predicted that inflation would continue to slow in September. The deceleration is largely attributed to a decline in prices of key staple goods, a relatively stable exchange rate, and favorable base effects.

The sharp contrast with last year’s inflation rate, 26.4% in September 2024, has played a significant role in pushing down the current annual figure, according to analysts. A stronger Egyptian pound against the U.S. dollar last month, combined with continued interest rate cuts, also helped lower the final consumer cost of many goods.

“The base-year comparison remains a key driver in September’s softer inflation reading,” said one Cairo-based economist involved in the CNBC survey. “Monetary policy easing and currency stability are further supporting the disinflation trend.”

Despite the recent improvement, 70% of survey respondents expect inflation to reaccelerate in Q4, citing an anticipated increase in fuel prices in October. Many believe the impact will push annual inflation back up toward the 15% level by year-end.

However, the remaining 30% of analysts argue that base effects could continue to cushion the impact of fuel price hikes, resulting in a more stable or even slightly downward trajectory for inflation in the final quarter.

The Central Bank of Egypt has previously signaled that inflation is expected to follow a gradual downward path in the medium term. However, it also warned of asymmetry in price trends, with non-food inflation proving more persistent and fiscal reforms potentially adding upward pressure.

The CBE projects that the average annual headline inflation will hover around 14% in 2025, assuming continued policy discipline and favorable external conditions.