War pushes Egypt’s inflation higher to 15.2% in March, beating expectations

Annual urban inflation accelerated for the second consecutive month to 15.2% in March — beating almost all analyst estimates — as the economy absorbed the first full month of the US-Israeli war with Iran, surging energy prices, and a weakening EGP fueled broad-based cost pressures. On a monthly basis, inflation jumped to 3.2%, compared to 2.8% a month earlier, according to Capmas data.

“March inflation came higher than our estimate of 14.5% y-o-y and 2.6% m-o-m, and higher than the Reuters poll’s median estimate of 14.7% y-o-y,” HC’s Nemat Choukri tells EnterpriseAM. Choukri blames the war, which pushed global energy prices higher, prompting the government to raise diesel and petrol prices by an average of c.16% on 10 March, alongside a c.12% depreciation in the EGP, which ended the month at EGP 54.56/USD.

Food and beverage prices — which account for the majority of the goods in the CPI basket — rose 4.8% in a single month as war-driven shipping and ins. costs trickled down, mainly on the back of a 21.6% increase in vegetable prices fueled by rising transportation costs, CI Capital writes in a note seen by EnterpriseAM. Electricity, gas, and other fuel items rose by 8.6% m-o-m.

“Our main concern here is the potentially lingering upward pressure on the food item, which might witness global disruptions fueled by higher fertilizer and energy prices,” Thndr’s Esraa Ahmed tells us.

More price hikes are coming: Recent fuel hikes of 14–30% in March will be compounded by upcoming electricity price hikes. Commercial electricity tariffs are expected to jump between 20–91% this month, along with an increase in residential tariffs between 16–28%.

What’s next

Where we go from here is closely tied to currency movements and utility price adjustments. “We expect the electricity price hikes to reflect in the April 2026 inflation figure […] it is likely to be partially offset by a possible drop in vegetable prices due to the harvesting season,” CI Capital notes. In addition, it “expect[s] currency movements throughout [April] to also direct the inflation momentum and direction.”

Potential easing? “Our online price trackers suggest a somewhat sharp reversal in poultry prices (down c. 8% m-o-m) and we expect a lower monthly print in April, which could translate into a modest drop in the annual headline inflation,” Beltone Head of Research Ahmed Hafez tells us. But unfavourable base effects could see inflation staying within current levels throughout 2Q and 3Q due to persistently elevated global energy prices, he added.

Don’t expect interest rates to dip anytime soon: “The CBE is likely to pause its monetary easing cycle until Egypt is firmly back on its pre-February disinflationary path,” Hafez said. Most analysts we spoke to agreed. “We believe the CBE might prefer to put its easing cycle on hold throughout the current phase of uncertainty and until the real cost of the Iran war can be assessed,” Ahmed added.

The central bank next meets on 21 May to review its policy rates.