Egypt’s CBE expects inflation to stabilise before declining in Q1-25

The Central Bank of Egypt (CBE) expects inflation to persist near its current levels through the end of 2024, with significant easing expected by the first quarter of 2025, its monetary policy report showed on Thursday.

This outlook reflects “the cumulative impact of recent monetary policy tightening and a favourable base effect,” which are projected to curb inflationary pressures.

Annual headline inflation in October 2024 held steady at 26.5 per cent for the third consecutive month. This stability was largely influenced by the controlled prices of non-food items such as liquefied petroleum gas (LPG) and pharmaceuticals. Meanwhile, core inflation declined slightly to 24.4 per cent in October from 25.0 per cent in September. Notably, annual food inflation eased to 27.3 per cent, marking its lowest rate in two years.

“These outturns along with the improvement in inflation expectations, as reflected by the gradual normalisation of monthly inflation dynamics, suggest that inflation will continue its declining course, subject to the impact of successive rounds of administered price increases.”

These developments suggest a gradual normalisation of monthly inflation dynamics and improving inflation expectations. However, the CBE cautioned that “the balance of risks still tilted to the upside,” citing geopolitical tensions, potential trade protectionism, and a higher-than-expected pass-through of fiscal measures as key challenges.

The CBE’s projection highlights a critical turning point in early 2025, when inflation is expected to show a marked decline. The central bank reaffirmed its commitment to managing inflationary risks and maintaining economic stability as part of its broader monetary policy goals.

Attribution: CBE