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Annual headline urban inflation dropped to 24.1% in December, down from 25.5% in November, according to data from state statistics agency Capmas released on Thursday. This figure marks the nation’s lowest inflation reading since December 2022 when inflation recorded 21.3%, which marked the beginning of an upwards trend that is only now starting to slow down. On a monthly basis, headline inflation also calmed, falling 0.3 percentage points to 0.2%.
Once again, food and beverage price inflation drove the trend, with the segment — the largest component of the basket of goods and services used to calculate headline inflation — falling 4.3 percentage points in December to record 20.3%. On a monthly basis, food and beverages prices fell 1.5%, marking the second consecutive month of price decreases after a 1.9% decline in November.
The dip in inflation came in line with analysts and economists forecasts, with a medianpoll of 13 analysts by Reuters off the mark by only 0.1 percentage points. The poll forecast inflation falling 1.3 percentage points, which some of those polled, including HC Securities’ Heba Monir explained by pointing to “relatively lower to stable vegetable and fruit prices due to seasonality.”
Annual core inflation — which excludes volatile items like food and fuel — fell 0.5 percentage points from November’s 23.7% to record 23.2%, according to the Central Bank of Egypt. On a monthly basis, core inflation rose 0.5 percentage points, recording 0.9% in December.
Remember: The central bank decided to extend its inflation targets to an average 7% ±2 percentage points by 4Q 2026 and 5% ±2 percentage points by 4Q 2028 during its latest Monetary Policy Committee meeting in an effort to “allow for more room to weather price shocks without requiring further stringent monetary tightening.” The CBE was previously targeting inflation to average 7% ±2 percentage points by 4Q 2024 and 5% ±2 percentage points by 4Q 2026.
The worst could be over, with Bloomberg writing that the slowdown suggests that “the worst effects of a recent wave of price hikes for fuel, electricity, cigarettes and other items may have passed.”
