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Egypt's inflation rate, which was approximately 30 percent in May, is projected to increase by 3 to 4.5 percentage points following a significant fuel price hike implemented on July 25, according to Deputy Finance Minister Ahmed Kojak. The fuel prices were raised by up to 50 percent as part of the conditions of a USD 12 billion International Monetary Fund (IMF) loan agreement. Despite a recent decline in inflation to 27.5 percent in June, down from 28.1 percent in May, this rate remains far above the Central Bank of Egypt's target of 5 to 9 percent for the end of the year.
The reduction in the inflation rate does not indicate lower prices but rather a slower increase compared to the previous year. The Arab Monetary Fund forecasts Egypt's inflation at 27 percent for 2024, decreasing to 18 percent in 2025 due to efforts by the Central Bank to stabilize prices. In the latest monetary policy report, the Central Bank stated that inflation is expected to remain stable in 2024, even amidst fiscal consolidation pressures.
The monthly inflation rate increased to 1.8 percent in June from -0.8 percent in May. The Central Agency for Public Mobilization and Statistics (CAPMAS) noted that the annual inflation slowdown was attributed to falling prices in poultry, meat, vegetables, postal services, and cereals. However, monthly inflation rose due to higher costs in vegetables, fruits, clothing, healthcare, and utilities.
Comparative data from CAPMAS showed notable price increases from June 2023 to June 2024, with food and vegetables rising by 30.8 percent, transportation by 17.5 percent, utilities by 12.4 percent, clothing and footwear by 25.9 percent, and cultural services by 56.6 percent.
On July 18, the Central Bank’s Monetary Policy Committee decided to maintain the overnight deposit rate at 27.25 percent and the overnight lending rate at 28.25 percent. Since January, the Central Bank has increased key interest rates by 800 basis points as part of its strategy to control inflation. The IMF has recently rescheduled its executive board meeting to review Egypt's progress under the loan program, moving it from July 10 to July 29.