Good afternoon all you wonderful people, and happy Monday. We have a busy issue for you today, with January’s inflation reading, the health effects of early sugar exposure, and a grab-bag of Valentines Day events on the docket for today.

THE BIG STORY TODAY

Inflation dips slightly to 24.0% y-o-y in January: Annual headline urban inflation slowed slightly to 24.0% in January, a 0.1 percentage point drop from 24.1% y-o-y in December, according to data out this morning from state statistics agency Capmas. The reading marks Egypt’s lowest inflation reading since December 2022 and the third consecutive month of declines in the metric.

F&B price inflation rose on both monthly and yearly bases: Food and beverage price inflation — the largest component of the basket of goods and services used to calculate headline inflation — rose by 0.5 percentage points in January to record 20.8% y-o-y. On a monthly basis, food and beverages prices were up by 1.8%.

The slowdown was less significant than expected: While the reading was in line with the 24.0% y-o-y rate anticipated by local analysts polled by Morgan Stanley last month, who cited a “recent softness” in fruit and vegetable prices, it was a percentage point higher than the median forecast of 17 analysts polled by Reuters last week, who expected January’s reading to fall to 23% y-o-y.

The continued decline could spell CBE rate cuts: The sustained decline could offer the Central Bank of Egypt room to begin its monetary easing cycle when the Monetary Policy Committee meets next week to decide on interest rates, though the slight decline could potentially weigh on the size of the cut. “There’s room for the Central Bank of Egypt (CBE) to reduce interest rates by around 100-200 bps, but it’s more likely for it to fall by 100 bps due to the slower-than-expected drop in the inflation reading,” economist Mona Bedeir told EnterpriseAM.

THE BIG STORY ABROAD

Today’s international headlines continue to be all Donald Trump, all day, with global media outlets continuing to assess the impact of the US president’s newly announced 25% steel and aluminum tariffs, which are set to impact producers from Brazil to China.

The new tariffs are set to damage economic relationships with key US allies: Canada — which supplied a whopping 79% of the US’ aluminum imports in the first 11 months of 2024 — decried Trump’s move, with the country’s innovation minister Francois-Philippe Champagne noting that “Canadian steel and aluminum support key industries in the US from defence, shipbuilding, and auto.” Meanwhile, the European Commission asserted that it would “react to protect the interests of European businesses, workers and consumers from unjustified measures,” adding that it had not received notification of any new levies from the US government.

We’ve seen this movie before: The new tariffs are a variation on the 25% tariff on steel and 10% tariff on aluminum that Trump put into place during his first term. While Trump eventually offered Canada and Mexico — two of the three largest sources of US steel and aluminum, alongside China — exemptions from the tariff measures, the two countries face a decidedly less friendly US administration this time around, with both facing a 25% tariff on all US imports set to go into effect 1 March after a temporary delay.

** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

• The private sector minimum wage will rise to EGP 7k starting March: The National Wages Council has decided to raise the minimum wage for private sector workers to EGP 7k a month, up from EGP 6k, starting in March.
• Hassan Allam Holding to develop 14.1k-feddan agricultural project: Hassan Allam Holding inked an investment contract with state-owned Egyptian Countryside Development Company (ECDC) that will see the former’s newly launched subsidiary Jinet Agriculture develop an integrated agricultural development project on 14.1k feddans in western Minya.
• United Energy eyes 100% of Apex International Energy’s Egypt operations: Hong Kong-listed United Energy Group (UEG) inked a sale and purchase agreement to fully acquire Apex's upstream oil and gas exploration and production operations in Egypt for an undisclosed sum.

☀️ TOMORROW’S WEATHER- Temperatures are maintaining their recent chillier low this week with tomorrow’s mercury rising to a mere 19°C in the morning before dropping to 10°C in the evening, according to our favorite weather app.