Annual inflation slows for the fourth consecutive month: Annual urban headline inflation cooled 0.6 percentage points to 27.5% in June, down from 28.1% in May despite fears of renewed inflationary pressures following a historic increase in subsidized bread prices, according to figures from state statistics agency Capmas. This month’s inflation figure is the lowest recorded since January 2023.

Despite an overall dip in inflationary pressure, food and beverage prices were up: Food and beverage prices — the largest component of the basket of goods and services used to calculate headline inflation — rose 31.9% y-o-y in June, up 0.9 percentage points from the month prior. One of the biggest contributors to this jump in food inflation was a 33.2% y-o-y increase in bread and cereals on the back of the government’s decision to quadruple subsidized bread prices that came into effect at the beginning of June. The uptick in the overall figure was limited by bread only constituting around 1% of the basket of goods that make up food and beverages.

There was no single factor driving the overall deflationary trend: Except for alcohol and tobacco, which dropped 29.2 percentage points to 57.7% y-o-y, inflationary trends were mixed. The favorable base effect also helped absorb some of the price hikes and help keep annual inflation from picking up.

Most analysts were spot-on with their forecasts: A Reuetrs poll of 17 analysts got it right to the decimal point with its forecast of 27.5%.

Monthly inflation was back in the red: On a monthly basis, inflation was up 1.6% on all items, after having fallen 0.7% m-o-m in May — in what was the first such fall in prices since June 2022. Driving the trend were food and beverage prices increases, which were up 2.6% from the month before on the back of a 12.3% rise in bread and cereals prices. Monthly inflation had been on a downward trend for three consecutive months.

Core inflation was down: Annual core inflation — which excludes volatile items such as food and fuel — slowed 0.5 percentage points to 26.6%, down from 27.1% in May, according to data from the Central Bank of Egypt. Monthly core inflation, meanwhile, stood at 1.3%, up from -0.8% during the month prior.

Most analysts seem to be confident that the disinflationary trend will continue, but risks remain: While the government, along with most analysts and financial institutions, see inflation continuing to cool for the rest of the year, expected energy, fertilizers, and meds price hikes are still a concern. “Increases to electricity and fuel prices present upside risks in the coming months, but we continue to expect the disinflation process to continue in the coming months and into 2025,” Capital Economics said in a note seen by Enterprise.

The international press also picked up our latest inflation data: Reuters | Bloomberg.

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