Reduced inflation in Egypt from December

Rates of inflation in Egypt eased to 24.2% by December 2024 as high food prices continue to decrease, according to Reuters polls on 8th January.

Data collected from 6th to 8th January shows that this is a steady lowered rate of inflation, following a rate of 25.5% in November.

Inflation in Egypt picked up in August, September and October, but declined in November and is well below the all-time peak of 38% that was hit in September 2023.

This has in part been fuelled by unsustainable growth in the money supply. M2 money supply expanded by 29.06% in the year to end November, which was just slightly below the 29.59 reported in the year to end September.

This comes after Egypt’s signing of an $8 billion financial support package with the IMF in March 2024 in efforts to narrow Egyptian budget deficit and adopt less inflationary economic policies, however this package required subsidies on domestic items to be scrapped, therefore pushing up prices.

Initially conditions required Cairo to produce a primary balance surplus of 4.5% of GDP for the fiscal ear 2025/2026, however this has now been lowered to a 4% surplus. This adjustment is intended to allow more funds towards social programs supporting vulnerable groups in Egypt.

Following subsidy cuts and rising global energy and food costs, as well as geopolitical strife, the Egyptian economy has suffered, with the Egyptian pound depreciating by 39% over the past year.

To counter this, Egypt has of late made a concentrated effort to secure foreign investment, such as $35 billion for the UAE, and two separate sums of $5 billion and $15 billion from Saudi Arabia.

Egypt’s Central Agency for Public Mobilization and Statistics (CAPMAS) is set to release exact inflation figures on the morning of 9th January.