(MENAFN- Daily News Egypt) Annual urban headline inflation in Egypt eased for the second consecutive month, dropping to 13.9% in July 2025 from 14.9% in June, according to the Central Bank of Egypt (CBE). The deceleration was mainly driven by a significant decline in fresh fruit and vegetable prices, reflecting improved supply conditions despite upward pressure from higher tobacco prices following recent tax amendments.

Inflationary pressures continued to ease across most categories of the Consumer Price Index (CPI) basket. Annual core inflation remained relatively stable at 11.6% in July, slightly up from 11.4% in June, while monthly core inflation recorded a deflation of -0.3%, compared to -0.2% in the previous month. The continued monthly deflation in core prices was largely attributed to a sharp 3.0% drop in core food prices, marking their lowest level since December 2018. In contrast, non-food inflation rose by 1.0%, driven primarily by modest increases in the prices of services such as rent and dining out, as well as retail items including clothing, household cleaning products, and personal care goods.

Monthly urban headline inflation registered a deflationary reading of -0.5% in July, compared to -0.1% in June and 0.4% in July 2024. This decline was primarily the result of falling prices in core food categories and fresh produce. In rural areas, the trend was similar, with annual headline inflation falling to 12.4% in July, down from 13.9% in June. Nationally, headline inflation also declined, reaching 13.1%, compared to 14.4% the previous month.

Food inflation played a central role in easing overall price pressures. The monthly decline of 3.0% in food prices contributed a downward pull of 1.15% on overall monthly inflation. Fresh fruit and vegetable prices fell significantly, dropping to an annual inflation rate of 11.5% - their lowest level since June 2022 and an unusual move against typical seasonal trends. Their combined impact reduced monthly inflation by 0.73%. Poultry prices also declined for the second consecutive month, falling 9.1%, consistent with seasonal patterns, and contributing a further 0.46% drop.

In contrast, some upward pressure came from regulated prices, which rose by 2.1%, adding 0.46% to monthly inflation. This was driven largely by a 7.9% increase in tobacco prices, following the implementation of new tax amendments at the beginning of the month. Service prices rose by 0.5%, contributing 0.14%, mainly due to higher housing rents and increased spending in restaurants and cafés. Retail items also saw a modest increase of 0.35%, contributing 0.05%, led by small price gains in clothing, cleaning supplies, and personal care products.

Within the core CPI, the overall monthly decline of 0.3% reflected these same trends. Core food items accounted for a 0.59% reduction, while services and retail components added 0.19 and 0.07%, respectively.

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