Cityscape in Egypt

Egypt Inflation May 2024

Egypt: Inflation falls to over year low in May

Inflation dropped to 28.2% in May from April’s 32.6%. While May’s reading was still over three times higher than the upper bound of the Central Bank of Egypt’s 5.0–9.0% target band, it was still the lowest since January 2023 and undershot market expectations. Looking at the details of the release, the moderation was largely driven by slower growth in prices for food and non-alcoholic beverages—the largest consumer price index basket component. In addition, price pressures for transportation softened.

Accordingly, the trend pointed down, with annual average inflation coming in at 34.1% in May (April: 34.5%). Meanwhile, core inflation fell to 27.1% in May, from the previous month’s 31.8%.

Lastly, consumer prices fell 0.68% over the previous month in May, swinging from April’s 1.06% increase. May’s result marked the weakest reading since June 2019.

Our Consensus is for the disinflation process to continue ahead. In calendar year 2024, inflation will only average marginally below 2023’s level, and our panelists do not expect inflation to fall back within target before 2026.

Upside risks remain; on 1 June, the government hiked the price of subsidized bread by 300%—as part of the measures to implement following the deal with the IMF. A notably weaker pound, meanwhile, has so far not had as large an impact as projected; it would appear prices have already largely adjusted to the currency’s plunge in March.

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