Egypt's Annual Urban Inflation Eases To 24% In January

(MENAFN- Daily News Egypt) Annual urban inflation in Egypt slowed slightly to 24% in January 2025, down from 24.1% in December 2024, according to the Central Agency for Public Mobilization and Statistics (CAPMAS). However, monthly inflation saw a notable increase, rising to 1.5% in January from just 0.2% the previous month.

In its latest report, CAPMAS stated that the country's overall consumer price index reached 243.5 points in January, with an annual inflation rate of 23.2%, compared to 23.4% in December. The slight decline in annual inflation was primarily driven by lower prices for vegetables, which dropped by 2.6%, and seafood, which fell by 0.3%. Meanwhile, prices remained stable for organized tourism trips, all levels of education, insurance, and telecommunications services.

Despite the moderation in annual inflation, several key consumer categories experienced price increases. Grains and bread rose by 1.3%, while meat and poultry surged by 5%. Prices for dairy, cheese, and eggs saw a modest increase of 0.3%, while oils and fats climbed by 0.7%. Fruits recorded a sharp rise of 9.8%, and sugar and confectionery went up by 0.7%. Additionally, coffee, tea, and cocoa prices increased by 1.2%.

Housing and household-related costs also edged higher, with actual rent rising by 1.3%, housing maintenance by 0.9%, and electricity, gas, and other fuels by 0.1%. Furniture, carpets, and household furnishings rose by 0.6%, while household appliances increased by 0.8%. Other notable price hikes included textiles (0.4%), ready-made garments (1.4%), and footwear (1.3%).

Medical costs saw substantial increases, with medical products, equipment, and devices rising by 7%, outpatient services by 0.9%, and hospital services by 1.4%. Transportation costs also climbed, with vehicle purchases increasing by 1.1%, private transportation expenses by 0.5%, and transportation services by 0.5%. Postal services saw one of the steepest rises, jumping by 17.2%.

CAPMAS further noted that the monthly inflation rate for the entire country rose by 1.6% in January, up from 0% in December.

Amid these inflationary trends, the Central Bank of Egypt (CBE) recently extended its inflation target timeline. The bank now aims to bring inflation down to 7% (±2%) by the fourth quarter of 2026 and 5% (±2%) by the fourth quarter of 2028. This decision aligns with its gradual shift toward a fully integrated inflation-targeting framework.

The extension of the target timeline coincided with the Monetary Policy Committee's decision to keep key interest rates unchanged for the sixth consecutive time. The overnight deposit rate remains at 27.25%, the lending rate at 28.25%, and both the main operation rate and the discount rate at 27.75%.

The CBE emphasized that corrective measures introduced since March 2024 have helped stabilize the economy, curb inflationary pressures, and attract foreign currency inflows. These measures included a restrictive monetary policy and unifying the foreign exchange market, which helped anchor inflation expectations.

Despite these efforts, the CBE cautioned that inflation risks persist due to global geopolitical tensions, protectionist policies, and fiscal tightening. However, inflation is expected to decline significantly from the first quarter of 2025 as the effects of monetary tightening take hold. Single-digit inflation is projected by the second half of 2026.

Given these projections, the CBE determined that extending its inflation target timeline would allow for price shock absorption without excessive monetary tightening that could slow economic growth. It reaffirmed that interest rates would remain steady until inflation shows a sustainable decline and emphasized that future policy decisions would be made based on evolving economic data and risk assessments.

Reiterating its commitment to inflation control, the CBE assured that all available tools would be used to curb demand-driven pressures and contain secondary effects of supply shocks, ensuring inflation reaches target levels in the coming years.

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