On a monthly basis, the headline inflation rate jumped in July by two percent compared to the level seen in June 2023, CAPMAS data showed.

CAPMAS attributed the surge of the annual headline inflation rate mainly to hikes in food and beverage prices (68.2 percent), alcohol and tobacco products (51.9 percent), and restaurants and hotel services (50.3 percent).

The monthly increase in the headline inflation rate was also predominantly driven by increases in food and beverage costs (2.3 percent), alcohol and tobacco products (7.9 percent), and healthcare services (3.8 percent), as per CAPMAS.

Since March 2022, following the start of the Russian-Ukrainian war, Egypt’s inflation has maintained its upward trend. The Central Bank of Egypt has hiked key interest rates by a total of 11 percent (1100 bps) over the past 17 months in a bid to contain the soaring inflation.

Egypt is currently engaged in a $3 billion loan deal with the International Monetary Fund (IMF), under which Egypt has a commitment to bring down the inflation to seven percent by 2026.

In July, the IMF revised up its projections for Egypt’s inflation in 2023 and 2024 to 24.4 percent and 32 percent, respectively, up from 21.6 percent in 2023 and 18 percent in 2024 that the fund expected in April, chiefly because of the depreciation of the Egyptian pound against the US dollar.

Since March 2022, the CBE has devaluated the Egyptian pound against the US dollar three times, through which the local currency has lost over 75 percent of its value against the greenback.

During 2023, the CBE raised the key interest rates by a total of three percent (300 bps) amid expectations that it would apply a fourth wave of devaluation over the coming months.