Egypt's headline inflation rate almost halves in February

Egypt’s annual urban consumer price inflation plunged to 12.8 per cent in February from 24 per cent in January, decelerating even faster than analysts had expected, official data showed on Monday.

The drop was amplified by a statistical base effect, as exceptionally fast price increases of the past two years were no longer reflected in the statistics, said analysts. Fifteen analysts polled by Reuters last week had expected inflation to cool to a median 14.5 per cent.

Month on month, prices were 1.4 per cent higher in February than in January. Food and beverage prices were up by an annual 3.7 per cent after rising 0.2 per cent from January.

Core inflation also plunged more than expected to 10 per cent on a year-on-year basis in February, from 22.6 per cent in January, said Egypt’s central bank.

Inflation climbed following the Russian invasion of Ukraine in early 2022, which prompted foreign investors to withdraw billions of dollars from Egyptian treasury markets. Headline inflation reached a record high of 38 per cent in September 2023.

The price rises were fuelled in part by rapid growth in the money supply. M2 money supply expanded by an all-time high of 32.1 per cent in the year to end of January, central bank data showed.

Egypt devalued its currency a year ago, raised interest rates by 600 basis points and signed an $8 billion financial support package with the International Monetary Fund, helping to bring its finances under control.