Egypt’s Core Inflation Declines to 10% in February 2025 Amid…

Egypt reported a decrease in core inflation to 10% in February 2025 from 22.6% in January. Urban inflation also dropped to 12.8%. Key price reductions in essential sectors contributed to this decline, despite some commodity price increases. The Central Bank maintained interest rates unchanged, citing global uncertainties as inflation risks. The MPC expects a continued downward trend in inflation, balanced against potential challenges from fiscal policies.

In February 2025, Egypt’s core CPI inflation decreased to 10%, a notable drop from 22.6% recorded in January 2025. The Central Bank of Egypt (CBE) reported a monthly core inflation rate of 1.6%, down from 1.7% in January and 13.2% in February 2024, reflecting a significant stabilization trend in the economy. Furthermore, urban inflation also fell to 12.8% from 24% in January 2025, attributed to the base-year effect.

The Central Agency for Public Mobilization and Statistics (CAPMAS) observed that the monthly inflation rate in urban areas eased to 1.4% in February 2025, down from 1.5% in January. The national consumer price index, which stood at 246.8 points, indicated an annual inflation rate of 12.5%, compared to 23.2% in January. CAPMAS identified price reductions in essential sectors as a key factor in the declining inflation rates.

Specific reductions noted by CAPMAS included a significant 8.2% decrease in vegetable prices, alongside minor drops in coffee, tea, cocoa, and household maintenance goods. Price stability in water and various fuel sources also contributed positively to Egypt’s inflation figures, although increases in several commodities countered this trend.

Certain areas saw price increases, with grain and bread rising by 0.8%, and meat and poultry by 3.2%. Further increases in dairy products by 0.7%, fish and seafood by 0.4%, as well as tobacco prices, which surged by 6.3%, highlighted disparities in the overall inflation landscape. Rising costs were also observed in housing, clothing, medical services, transportation, and various personal expenses.

Medical and transportation costs escalated, with outpatient services and hospital services each rising by 0.8%. Additionally, vehicle-related costs saw marks of an increase, showing a complex inflationary environment despite some sectors experiencing price stability.

In education, providers reported price hikes in pre-primary and basic education rising by 12.5% and secondary education by around 4.3%. Hospitality and personal care continued to trend upwards, with prepared meal prices and hotel services increasing by 0.5% and 8.0%, respectively.

The overall monthly inflation rate for Egypt was recorded at 1.4% in February 2025, compared to January’s 1.6%. The CBE’s Monetary Policy Committee (MPC) decided to maintain interest rates unchanged for the seventh consecutive meeting, holding the overnight deposit rate at 27.25% and the overnight lending rate at 28.25%.

The MPC noted growing inflationary risks attributed to global and regional uncertainties, such as U.S. protectionist policies and geopolitical tensions. Despite these concerns, a downward trajectory in inflation is anticipated for the first quarter of 2025, driven by previous monetary tightening and base-year effects. However, potential fiscal consolidation measures could slow this decline.

The MPC also assured that forthcoming policy decisions will be influenced by evolving economic conditions, with continuous evaluation for potential easing cycles. Their commitment remains towards employing all necessary tools to rein in inflation within targeted ranges while managing demand-driven pressures and secondary supply shocks effectively.

In conclusion, Egypt’s core inflation rate demonstrates significant reduction trends as reported by the Central Bank and CAPMAS. Key factors influencing the declining trends include strategic price reductions in essential commodities and services, although some prices have increased. The upcoming monetary policy decisions will be crucial in navigating the economic landscape and addressing inflationary pressures while ensuring stability in financial conditions.

Original Source: www.dailynewsegypt.com