Egypt's Inflation Tumbles: A Financial Turnaround

Egypt's urban consumer price inflation rate fell to 25.5% in November, the lowest since late 2022. Inflation surged after the Ukraine conflict but has been steadily decreasing since September 2023. Food prices fell monthly but remained high year-on-year. A significant M2 money supply expansion has influenced these trends.

In a surprising economic turn, Egypt's annual urban consumer price inflation rate declined to 25.5% in November, marking its lowest point since December 2022, according to CAPMAS data released on Tuesday.

The country's inflation surge began in early 2022, triggered by the Russian invasion of Ukraine, which led to significant foreign capital flight from the Egyptian treasury markets. Inflation peaked at 38.0% in September 2023, but a consistent downward trend has since been observed, with a reduction to 26.5% by October 2024.

Analysts participating in a Reuters poll had anticipated a smaller decline to 26.4% for the latest numbers. Despite a monthly inflation rise of 0.5% in November, food prices saw a notable monthly drop of 2.8%, still maintaining a high year-on-year increase of 23.3%. Central bank reports indicate core inflation also decelerated to 23.7% from 24.4% in October, amidst a substantial 29.54% expansion in the M2 money supply.