Egypt’s headline inflation is expected to ease to 11.7 per cent in January from 12.3 per cent in December, according to a Reuters poll of analysts released on Thursday, supported by favourable base effects and easing food prices.
The median forecast for annual headline urban consumer inflation was derived from a poll of 18 analysts conducted between January 29 and February 5.
Analysts attributed the anticipated slowdown to a stronger currency and moderating cost pressures across key sectors.
“A stronger pound, easing transport and food inflation will be the primary drivers of the slowdown in Egypt’s inflation rate,” said James Swanston of Capital Economics.
Egypt’s annual inflation has fallen sharply from a record high of 38 per cent in September 2023, aided by tighter monetary policy and an $8 billion financial support package signed with the International Monetary Fund (IMF) in March 2024.
While inflation is expected to continue cooling, analysts cautioned that food prices could still exert upward pressure.
“A relatively favourable base effect in January is expected to show up in the January 2026 figure, cushioning an expected rise in the food and beverage item,” said Esraa Ahmed of investment firm Thndr.
Five analysts also provided forecasts for core inflation, which excludes volatile items such as certain food and fuel products. They predicted core inflation would edge down to a median 11.5 per cent in January, compared with 11.8 per cent in December.
Despite the slowdown, inflationary pressures remain influenced by monetary expansion. Data from Egypt’s central bank showed that M2 money supply growth accelerated to 20.5 per cent year-on-year in December, up from 20.14 per cent in November, although still well below its 31.5 per cent peak in January 2023.
The easing inflation trend prompted the Central Bank of Egypt to cut its overnight lending rate by 100 basis points to 21.00 per cent in December, bringing total rate cuts in 2025 to 725 basis points.
The bank’s Monetary Policy Committee is scheduled to review interest rates again on February 12, while Egypt’s state statistics agency CAPMAS is expected to release the official January inflation figures on Tuesday.
