Egypt's Inflation Rate Dips Dramatically

Egypt's urban consumer price inflation dropped significantly to 12.8% in February, down from 24.0% in January, outpacing analyst expectations. Month-to-month, prices rose by 1.4%. The record-high inflation was previously driven by international events and currency devaluation, with recent measures stabilizing the economy.

Egypt's annual urban consumer price inflation saw a remarkable decrease to 12.8% in February, down from the previous month's 24.0%, a rate much faster than analysts had expected, as per CAPMAS data released on Monday.

The decline is attributed to the base effect no longer reflecting the drastic hikes seen over the past two years, according to analysts. A prior Reuters poll showed projections of a median 14.5% drop. Month-on-month statistics reveal a 1.4% increase from January, with food and beverage prices showing a modest annual rise of 3.7% after a slight 0.2% increase since the start of the year.

Increases in inflation since 2022 followed the Russian invasion of Ukraine, causing foreign investors to retreat from Egypt's treasury markets, culminating in a September 2023 peak of 38.0%. Contributing factors included a surge in money supply by 32.1% by January's end. Measures taken a year ago—currency devaluation, interest rate hikes, and an $8 billion IMF package—have assisted in stabilizing the nation's finances.

(With inputs from agencies.)