Cityscape in Egypt

Egypt Inflation December 2023

Egypt: Inflation drops to lowest level since May in December

Inflation came in at 33.6% in December, which was down from November’s 34.6%. December’s result marked the lowest inflation rate since May. Looking at the details of the release, the decrease reflected prices for food and non-alcoholic beverages growing at a slower rate year on year—though they still grew by over 60%. Meanwhile, prices for transportation rose at a marginally softer pace compared to the previous month’s reading.

Still, the trend pointed up, with annual average inflation coming in at 33.9% in December (November: 32.9%). Meanwhile, core inflation fell to 34.2% in December, from the previous month’s 35.9%.

Lastly, consumer prices rose 1.39% over the previous month in December, picking up from the 1.30% increase seen in November.

Our panelists expect the disinflation process to gradually continue this calendar year (CY): A high base of comparison, slower activity, the delayed impact of elevated interest rates and a higher unemployment rate should help cool price pressures. Consequently, inflation will average below CY 2023 levels.

That said, overall inflation is expected to be more than double the upper bound of the Central Bank of Egypt’s 5.0–9.0% target band in 2024; our panelists only see it returning to target in CY 2026. Risks to the inflationary outlook are skewed to the upside and include a weaker Egyptian pound—especially in the parallel market—and higher import commodity prices amid the Red Sea crisis driving up global shipping costs.

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