Egypt's inflation surges at fastest pace this year in May

Egypt Independent

2 days ago

Egypt's urban inflation rate saw its fastest acceleration of the year in May, reaching 16.8 percent year-on-year, up from 13.9 percent in April.
This surge was primarily driven by increasing food prices, according to data released by the Central Agency for Public Mobilization and Statistics (CAPMAS) on Wednesday.
This marks the third monthly acceleration in consumer price increases in Egyptian cities this year, following similar upticks in March and April. On a monthly basis, urban inflation stood at 1.9 percent in May, compared to 1.3 percent in April.
Key drivers of inflationary pressure
The rise in May was notably fueled by significant increases in food categories: fruit prices jumped 13.4 percent year-on-year, vegetables rose 2.1 percent, and fish increased by 2.4 percent.
Additionally, prices for medical appliances and equipment saw a 6.9 percent increase.
Central Bank's outlook and administrative decisions
Despite the Central Bank of Egypt (CBE) noting a moderation in upward inflation risks in May, it cautioned that these risks 'remain present due to the effects of protectionist trade policies globally, escalating regional conflicts, and fiscal adjustment impacts exceeding expectations.'
The CBE, in a statement accompanying its second interest rate cut this year on May 22, anticipated a continued decline in the annual general inflation rate for the remainder of 2025 and throughout 2026.
It cited a slowdown in overall and core inflation, alongside a decrease in underlying inflation, as indicators of improved inflation expectations.
Many of this year's inflationary pressures in Egypt have stemmed from administrative decisions.
In April, Egypt raised fuel prices for the second time in six months, anticipating savings of LE35 billion in the current 2024-2025 fiscal year budget.
This increase, averaging two LE per liter, affected all types of gasoline and diesel.
Over the past year, the government has also increased prices for various goods and services. Metro and train ticket prices rose by 12.5 percent to 25 percent in August 2024 as part of efforts to reduce subsidies on essential services and goods.
In a significant move, the price of subsidized bread was increased by 300 percent in May 2024, the first such hike in over three decades.
This was followed by announced price increases for landline internet and mobile phone services, electricity, and construction materials, specifically cement and iron.