Inflation resumes slowdown in June and undershoots expectations

Latest reading: Inflation resumed its downward trend in June, ending a three-month blip of increases; consumer prices rose at a softer annual rate of 14.9% in June, following May’s 16.9% surge. June’s print surprised markets notably to the downside. Looking at the details of the release, the moderation was largely due to a slower increase in prices for food and non-alcoholic beverages—the largest component in the consumer price index basket. Meanwhile, prices for transport rose at a slightly faster clip in June—the third acceleration in a row—after the government cut fuel subsidies on 11 April as part of the IMF-backed reforms. Annual average inflation fell to 20.4% in June (May: 21.5%). Meanwhile, core inflation fell to 11.4% in June from the previous month's 13.1%. Lastly, consumer prices dropped 0.16% in June over the previous month, contrasting the 1.88% increase logged in May. June's result marked the weakest reading since May 2024.

Outlook: Our Consensus is for inflation to average close to current levels in July–September and to ease in October–December. The slowdown will be driven by past interest rate hikes, a more stable pound and softer growth in private consumption. That said, price rises will ease less quickly than in recent quarters as the high statistical base effect runs its course; our panelists do not expect inflation to return to the Central Bank’s current 5.0–9.0% target band before October–December 2026. Overall, in calendar year (CY) 2025, our Consensus is for inflation to roughly halve from the year prior and to trend down through CY 2028. Spikes in food prices are a key upside risk.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Egyptian inflation projections for the next ten years from a panel of 17 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable inflation forecast available for Egyptian inflation.

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