Egypt’s Urban Inflation Holds at 12.3%

Inflation in Egypt’s urban areas remained steady at 12.3% year-on-year in December, signaling continued easing of price pressures and reinforcing expectations of further monetary policy loosening in the months ahead.

Data released on Saturday by the Central Agency for Public Mobilization and Statistics (CAPMAS) showed that monthly inflation slowed to 0.2%, down from 0.3% in November, reflecting relative stability in food and beverage prices, a key driver of consumer costs in the country.

The flat annual reading suggests inflation has entered a period of consolidation after a prolonged decline from its historic peak of 38% in September 2023, when Egypt was grappling with severe currency shortages and surging import costs.

The deceleration in inflation over the past two years has already allowed the Central Bank of Egypt (CBE) to embark on a monetary easing cycle. In 2025, the CBE cut interest rates by a cumulative 725 basis points, as price growth moderated and financial conditions improved following last year’s international bailout.

Economists say the latest data could open the door to additional rate cuts in 2026, provided inflation continues to trend lower and external pressures remain contained.

Markets across Egypt have seen a sharp drop in prices of basic commodities in recent months. During the final quarter of 2025, prices of some goods fell by as much as 80%, according to seven market participants who spoke to Asharq Business last month.

The declines were driven by a combination of stabilized production inputs, higher domestic output, and a surplus of supply amid subdued consumer demand, underscoring the depth of the slowdown in household spending.

In November, Egypt’s Finance Minister Ahmed Kouchouk described current inflation levels as “good” and indicative of a more stable economic environment, while stressing that employment indicators should receive greater attention than inflation data alone.

The cooling of inflation has been closely tied to Egypt’s $8 billion financial support package agreed with the International Monetary Fund (IMF) in March 2024, which helped restore investor confidence, stabilize the currency, and ease supply bottlenecks.

The IMF expects inflationary pressures to continue easing. In its October projections, the Fund forecast an average inflation rate of 11.8% for the current fiscal year ending in June, down sharply from 20.4% recorded in the previous fiscal year.