S&P Global: Egypt’s inflation, Red Sea risks may delay rate cuts

Egypt’s inflation accelerated in July, and risks from disruption to Red Sea shipping could prompt S&P Global Market Intelligence to push back its expectation for a resumption of interest rate cuts to later in 2026, the firm said Monday.

Annual urban inflation rose to 14.9 per cent in July from 14.3 per cent in June, while urban consumer prices were unchanged on average from the previous month.

The July inflation reading was broadly in line with S&P’s expectations, Jamil Naayem, Associate Director of MENA Economics at S&P Global Market Intelligence, said. However, S&P Global could modestly raise its short-term inflation forecasts in its August forecasting round because of risks from severe disruption to shipping through the Red Sea.

“Consequently, we are likely to push back our expected resumption of interest rate cuts to later in the second half of 2026, provided inflation expectations ease by then.” Naayem said in a note emailed to reporters.

Egypt’s annual core inflation, which excludes volatile items such as food and regulated prices, rose to 14.7 per cent in July from 14.3 per cent in June, according to data released by the Central Bank of Egypt (CBE) earlier the day.

Core inflation was unchanged month-on-month in July, compared with a 0.3 per cent increase in June and a negative 0.3 per cent in July 2025.

The latest inflation data come as the central bank weighs the pace of monetary easing after a period of elevated price pressures. A resumption of rate cuts is likely to depend on the direction of inflation expectations as well as external risks affecting prices and trade, including disruptions to Red Sea shipping.

Egypt has been working to bring inflation down while supporting economic growth, with the central bank using interest rates to contain price pressures and anchor expectations.