Egypt’s annual urban inflation dipped to 13.9% in July, down from 14.9% in June, offering further evidence of the country’s gradual economic stabilization. This slowdown, the second in consecutive months, is anchored by reduced costs in key food categories and the enduring effects of structural reform programs. Experts now cautiously anticipate continued disinflation through 2026 and beyond.
Prices for essential food items fell notably: meat and poultry dropped nearly 5%, fruits by 11%, and vegetables by 7%. Yet, some categories experienced modest upticks—bread and cereals rose 0.4%, and seafood ticked up 0.2%. On a year-over-year comparison, food and beverage prices remained elevated, growing 3.4%. CAPMAS data confirms that this represents a steep descent from the record high of 38% inflation in September 2023.
Emerging forecasts suggest that headline inflation may ease further to 12.5% by the end of the 2025–26 fiscal year, with expectations to drift toward 7–8% by 2027–28—yet still above the Central Bank’s 5–9% target range. The Central Bank itself has signaled a steady stance for the remainder of 2025, maintaining current interest rates while monitoring global economic risks.
Simultaneously, Egypt’s non-oil private sector showed resilient signs of stabilization in July. The S&P Global PMI inched upward to 49.5—just shy of the growth threshold—and employment rose for the first time in nine months. Input cost increases—such as cement and fuel—persisted but stayed below long-term trends.
Although domestic inflation in essential sectors like healthcare and energy remains high, easing food prices and macroeconomic support create a reflective path forward. Lower inflation reduces production costs, bolstering competitiveness in agricultural and manufacturing exports.
The CBE’s forecast of steady inflation through 2025 with gradual decline in 2026 reflects a cautious yet constructive monetary outlook, aimed at balancing price stability with economic momentum.
