Annual urban inflation eased 0.2 percentage points in November, going against what pretty much everyone expected, to end the month at 12.3%, according to data from state statistics agency Capmas seen by EnterpriseAM. A drop in food and beverage prices — down a whole 2.6% on a monthly basis — unexpectedly offset a rise in fuel prices.

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There’s a reason why they say predictions are a fool’s game, with almost none of the analysts and economists we trust the most foreseeing the country’s headline figure dipping in November. Headline inflation had been expected to accelerate 0.6 percentage points to 13.1% y-o-y, according to a poll of 14 analysts by Reuters.

The prices of food and beverages — the largest component of the basket of goods and services used to calculate headline inflation — rose at a softer pace last month, rising 0.7% y-o-y, compared to 1.5% in October. This was the result of a 15.5% dip in vegetable prices and a 1.8% reduction in meat prices.

Transport continued to push the headline figure higher: Transport prices were one of the main drivers of inflation last month, rising 28.9% y-o-y, as the market continued to digest October’s fuel price hike. Other goods and services that contributed to inflation include housing, water, electricity, gas and other fuels, alcoholic beverages, tobacco, and narcotics, and healthcare services.

It was the same story on a monthly basis, with prices rising at a slower pace from the previous month. Prices rose 0.3% m-o-m, compared to a 1.8% m-o-m rise in October, which HC Securities attributed “to the decline of food and beverage prices by 2.6% m-o-m, as reported, and the favorable base year effect.”

What about core inflation? Annual core inflation — which excludes volatile items like food and fuel — rose to 12.5% y-o-y in November from 12.1% the month before, according to data from the Central Bank of Egypt. On a monthly basis, core inflation came in at 0.8%, compared to 2.0% a month earlier.

The outlook: CI Capital sees inflation ending the year at 12.5%, before cooling to 9% by the end of next year. Similarly, Capital Economics expects inflation to “bump around current rates in December and early 2026,” before easing further in 1Q to then reach CBE’s target range of 7% (±2%).

The news should bolster expectations of a coming interest rate cut this month, with the central bank’s Monetary Policy Committee set to meet on 25 December. The unexpected fall also bodes well for the combined fifth and sixth reviews of the country’s USD 8 bn extended fund facility program with the IMF, with government sources previously telling EnterpriseAM that the visiting Fund delegation would be closely watching the data.

How big of a cut are we talking? Al Ahly Pharos Head of Research Hany Genena and Thndr’s Esraa Ahmed see room for a 100 bps cut during the MPC’s last meeting of the year. Against the grain, Capital Economics expects the CBE to keep interest rates unchanged before “resuming its loosening cycle with a 100 bps cut in 1Q 2026.”

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