CAPMAS readings also indicated a monthly inflation decline of 1.4 percent in February, compared to 1.6 percent in January.
This rate is below the 16 percent projected by the International Monetary Fund (IMF) for the end of the current FY2024/2025, which ends on 30 June.
Egypt's annual headline inflation rate recorded 36 percent during February 2024.
The data also showed that Egypt's overall consumer price index reached 246.8 points for February.
CAPMAS attributed this significant decline mainly to a decrease in vegetable prices by 8.2 percent; coffee, tea, and cocoa by 0.2 percent; and goods and services used in home maintenance by 0.1 percent.
However, prices of water and various home-related services, electricity, gas, and other fuel materials were stable despite the increase in the prices of grain and bread by 0.8 percent, meat and poultry by 3.2 percent, fish and seafood by 0.4 percent, and dairy products, cheese, and eggs by 0.7 percent.
Moreover, prices of oils and fats increased by 0.4 percent, fruits by 3 percent, sugar and sugary foods by 0.1 percent, tobacco by 6.3 percent, ready-made clothing by 0.6 percent, cleaning, repair, and rental of clothing by 0.3 percent, shoes by 0.8 percent, and actual housing rent by 1.1 percent.
Inflation figures are the key macroeconomic indicator, according to which the Central Bank of Egypt (CBE) revises the key interest rates.
Annual inflation decelerated less rapidly in the second half of 2024 than in the first half, stabilizing at 24 percent in January 2025.
Similarly, annual core inflation remained broadly stable in the fourth quarter (Q4) of 2024 and recorded 22.6 percent in January 2025.
Meanwhile, annual food inflation continues to decelerate, recording 20.8 percent in January 2025, and annual nonfood inflation remains around 25.5 percent on average throughout 2024. This reflects the gradual dissipation of previous shocks.
Thus, the CBE kept the key interest rates unchanged in its Monetary Policy Committee (MPC) first meeting of this year, at 27.25 percent, 28.25 percent, and 27.75 percent, for the overnight deposit rate, overnight lending rate, and the rate of the main operation, respectively.
“Upside risks surrounding the inflation outlook have increased compared to the previous MPC meeting. This is due to the increasingly uncertain global and regional outlook regarding the impact of US protectionist trade policies and geopolitical tensions,” a CBE statement said following the interest rates revision.
However, CBE expected inflation rates to decline substantially in Q1 of 2025 due to the cumulative impact of monetary policy tightening and the favourable base effect.
According to the CBE, this decline is also expected to continue during 2025, even at a slower pace, given the anticipated drag effect from the fiscal measures aimed at tightening the fiscal stance.
As such, underlying inflation is expected to converge to its historical average over the medium term, suggesting an improvement in inflation expectations.
Furthermore, the CBE’s MPC is scheduled to convene on 17 April to review the key interest rates.
Egypt is engaged in an $8 billion loan deal with the IMF. The fund's executive board is expected to decide on the fourth review of the programme on Monday, 10 March. Preserving the downward path of inflation rates is a key component of the loan deal.
It is worth noting that the CBE has kept its inflation targets unchanged while extending the time needed to reach them. It maintained these targets at seven percent (±two percent) in Q4 of 2026 instead of Q4 of 2024 and five percent (±two percent) in Q4 of 2028 instead of Q4 of 2026.
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