Inflation rises again in May to 16.8%

Good afternoon, friends, and a very happy Eid to you all.

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THE BIG STORY TODAY-

Annual headline urban inflation rose for the third month running in May to 16.8%, marking a 2.9 percentage point jump from the 13.9% recorded in April, according to data from state statistics agency Capmas. On a monthly basis, inflation rose by 0.6 percentage points to 1.9%.

Driving the trend: Food and beverage price inflation, the largest component of the basket of goods and services used to calculate headline inflation, rose 5.0 percentage points to 11.0% in May.

What about core inflation? Annual core inflation — which excludes volatile items like food and fuel — quickened to 13.1% in May from 10.4% in April, according to data from the Central Bank of Egypt. On a monthly basis, core inflation stood at 1.6% in May, compared with 1.2% a month earlier.

May's inflation reading came in above forecasts, including the central bank's recentprojection that price growth would continue to decline throughout the year, banking expert Mohamed Abdel Aal told EnterpriseAM. The rise in urban inflation “doesn't signal a long-term impact that would necessitate a return to monetary tightening or hint at a new, extended inflationary wave,” Abdel Aal suggested. Instead, he attributed the rise primarily to seasonal increases in food commodity prices and the lingering cumulative effect of fuel price hikes. Analysts we spoke to earlier this week saw annual inflation rising to 14.2-15.25% and expected monthly inflation to drop.

THE BIG STORY ABROAD-

US tariffs are back in the spotlight after US President Donald Trump’s order to double levies on steel and aluminum to 50% came into effect on Wednesday. The increase, which Trump announced last week and signed on Tuesday, is intensifying trade tensions as the US presses its trading partners to submit their “best offers” ahead of a 9 July deadline or face higher tariff rates if no agreements are reached. “The golden age is here,” the White House said on X following the sign off. The move will “provide greater support to these industries and reduce or eliminate the national security threat posed by imports,” the White House directive reads.

The hike applies to all trading partners except the UK, which inked a preliminary tradeagreement with the US last month. Tariffs on UK exports of the two metals will remain at 25% until at least 9 July to allow the two countries to resume negotiations.

The move will particularly impact Canada and Mexico, who rank first and third in steel export volumes to the US. Mexico has already indicated it will seek its own exemption from the increase. (Reuters | Bloomberg | New York Times | CNBC)

☀️ TOMORROW’S WEATHER- The weather throughout Eid is set to be consistent in the capital, with the peak being 35°C each day until Monday, which will see the mercury settle at 37°C. The weather at night will climb gradually from 21°C to 24°C throughout the break.

The North Coast will be seeing much cooler temperatures, with the daily highs reaching just 29°C except on Monday, which will see a warmer 32°C. The nights are consistently cool at 18-19°C, according to our favorite weather app.