Egypt: Inflation unexpectedly jumps in February
Inflation unexpectedly increased to 35.7% in February from January’s 29.8%. February’s figure was the highest since October 2023. Looking at the details of the release, prices for food and non-alcoholic beverages increased at a stronger rate in February, rising nearly 51% year on year. Similarly, prices for transportation increased at a faster pace. The acceleration of the headline inflation rate partly reflected the Egyptian pound trading at a record low against the USD in the parallel market during the month.
Annual average inflation rose to 34.4% in February (January: 34.1%). Meanwhile, core inflation rose to 35.1% in February from the previous month’s 29.0%.
Lastly, consumer prices increased 11.35% from the previous month in February, accelerating from 1.63% in January. February’s reading was the highest in recorded history.
Inflation will remain elevated this year and around three times higher than the upper bound of the Central Bank of Egypt’s 5.0–9.0% target band. Price pressures will be driven by a 50% increase in the minimum wage on 1 March, the government’s increase in petrol and diesel prices, and the steep weakening of the pound since 6 March—when the currency lost around 38% of its value against the USD. Our Consensus is for average inflation to gradually cool through Q4 2025, when it should fall back within the official target.
More positively, the CBE’s move to allow the pound to weaken helped secure an enlarged USD 8 billion loan from the IMF, which will help anchor investor sentiment and attract much-needed investment.