Egypt’s Urban Inflation Slows for Second Straight Month

Egypt’s annual inflation rate in urban areas slowed for the second consecutive month in May, supported by lower prices for some food items despite continued regional pressures from the Iran war, which increased energy and shipping costs.

Urban consumer inflation reached 14.6% in May 2026, down from 14.9% in April, according to data released by Egypt’s Central Agency for Public Mobilization and Statistics (CAPMAS).

On a monthly basis, however, inflation accelerated to 1.6% in May, compared with 1.1% in April.

The decline in annual inflation came despite expectations from the Central Bank of Egypt that price pressures could increase during 2026 due to the impact of regional developments and higher energy costs.

The central bank previously raised its inflation forecast for 2026, expecting average annual inflation to reach around 17%, before potentially returning to a downward path in early 2027.

The annual slowdown was partly driven by base effects, following a period of significant price increases the previous year, including fuel price adjustments and broader cost pressures.

Local market conditions also showed signs of easing inflationary pressures, particularly in food markets.

Vegetable and fruit prices declined by around 30% to 40% in June compared with previous months, supported by increased seasonal production.

Tomato prices reportedly dropped by nearly 50%, falling to around EGP 15–20 per kilogram, compared with EGP 45–50 a month earlier.

The poultry sector also saw declines, with chicken prices falling around 15% since the beginning of June to about EGP 70 per kilogram at the farm level. Egg prices dropped around 30% to approximately EGP 70 per carton.

The slowdown in inflation came despite continued increases in energy and service costs, as regional tensions increased import expenses for oil and gas.

Since the Iran conflict began in late February, Egypt raised fuel and gas prices by between 14% and 30%, while telecommunications service prices increased by up to 15%.

The latest projections from the International Monetary Fund (IMF) indicate that Egypt’s average inflation rate could reach around 13.2% in 2026, placing it among the highest projected inflation rates in the Arab region.

The latest data supports expectations that inflationary pressures may continue easing over the medium term.

HSBC Egypt CEO Todd Wilcox previously said inflation could stabilize near 14% by the end of 2026, with further declines possible later.

Simon Williams, Chief Economist for Central and Eastern Europe, the Middle East and Africa at HSBC, also expects inflation to continue declining despite recent global and regional pressures, supported by tighter monetary policy and improved economic conditions.