Egypt’s annual urban consumer price inflation fell to 25.7% in July from 27.5% in June, exceeding analysts’ expectations, according to the country’s statistics agency CAPMAS. The month-on-month decline in prices was 0.4% in July, down from 1.6% in June. Food prices decreased by 0.3% in July but remained 28.5% higher compared to the previous year.
Analysts had predicted a slower inflation rate of 26.6% for July, following a peak of 38.0% in September. This decrease is attributed to Egypt’s tighter monetary policy under an $8 billion IMF support package signed in March, which has led to higher interest rates and domestic price increases, including a 300% rise in subsidized bread and up to 15% in fuel prices.
The central bank raised interest rates by 600 basis points on March 6, bringing the total increase for 2024 to 800 basis points. The government’s efforts to address a significant budget deficit, which reached 505 billion Egyptian pounds ($10.27 billion) in the fiscal year ending June 30, have also contributed to the inflationary pressures.
