Deflation nation? Not everyone is so sure. Ten analysts and economists polled by EnterpriseAM on whether soon-to-be-released inflation data March will show annual urban inflation slowing or accelerating are split. While half of the respondents saw inflation inching down by as much as 0.4 percentage points from 12.8% in February, the other half saw inflation picking up slightly or even up to 18%. The median forecast of the ten analysts we polled saw staying put at 12.8%.

IN CONTEXT- The Central Bank of Egypt’s monetary policy committee meets on 17 April to review interest rates. Two factors that will weigh heavily in their decision on whether to cut or not: the global macro environment (roiled by Trump turmoil) and domestic inflation.

Inflation fell in each of the last four months and most recently plunged 11.2percentage points in February to reach 12.8%. The slowdown marked the nation’s lowest inflation reading since March 2022, which most attributed to a favorable base year effect. On a monthly basis, inflation fell by 0.1 percentage points to 1.4%.

The more optimistic of the bunch pointed to an expected stabilization of food and beverage prices, including Economist Mona Bedair, who told EnterpriseAM that they expect inflation to come in at 12.4% as food and beverage price stabilization helps offset a “possible increase in the prices of other non-food baskets including the prices of clothing and restaurants.” This was seconded by HC Securities’ Heba Monir, who also predicted inflation coming in at 12.4% due to the “relative stability in most commodities prices.”

However, our disinflationary path ahead is not set in stone, some of the analysts emphasized in comments to us. Economist Hany Abou El Fotouh told us that despite his assessment that the “gradual decline in global prices, exchange rate stability, and controlled government spending” would slow inflation, any new subsidy cuts and energy price hikes “could impact the inflation trajectory and potentially slow the targeted decline.”

Some think that seasonal factors associated with the holy month of Ramadan could see the headline figure inch up, with added inflationary pressures partially offsetting the decline in price inflation of some seasonal vegetables, CI Capital’s Sara Saada told us.

At the higher end of the spectrum was banking expert Mohamed Abdel Aal, who penciled in inflation coming in at 16-18% for March and April, provided that economic and geopolitical conditions remain unchanged, he told EnterpriseAM. This rate would be the "preferred rate for countries with economic and monetary conditions similar to ours when beginning the transition from monetary tightening to monetary easing,” he said.

Many of the analysts said the inflation reading could prompt the central bank to begin its monetary easing cycle at the next MPC meeting, as the significant drop in inflation in February and the expected stability of March’s reading are likely to give the CBE the confidence to begin cutting rates. “The outlook is for a gradual rate cut, considering that the U.S. has kept rates steady multiple times recently,” one source told us.

REMEMBER- The MPC decided to keep interest rates unchanged when it held its first meeting of the year in February, in what was expected by some to be the beginning of its long-awaited monetary easing cycle. The MPC deemed that “the current policy rates are appropriate to maintain a sufficiently tight monetary stance. This will ensure the realization of the projected disinflation path, and firmly anchor inflation expectations. Accordingly, the Committee’s decisions regarding the appropriate time for beginning the accommodative cycle will be assessed on a meeting-by-meeting basis.”

When do we get March’s inflation figures? State statistics agency Capmas is expected to release March’s inflation data on Thursday, 10 April.

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