Inflation in Egypt is expected to decrease slightly to 12.6% in March

A Reuters poll indicates that Egypt’s annual inflation is expected to have decreased further in March, following a significant drop in February attributed to a base effect.

Analysts suggest that the decline in annual inflation is expected to prompt the Central Bank of Egypt to reduce interest rates during its meeting on April 17. However, any potential cut may be modest due to the instability in international markets resulting from U.S. President Donald Trump’s tariff increases.

The median forecast from 14 analysts surveyed by Reuters indicated that annual urban consumer inflation was expected to decrease to 12.6% in March, down from 12.8% in February. The polling data was gathered between March 27 and April 7.

In January, year-on-year inflation reached 24.0%, prior to the impact of a base effect following a year of financial reforms.

“According to Sri Virinchi Kadiyala of Abu Dhabi’s ADCB, we anticipate a slight decrease in CPI to 12.5% year-on-year from 12.8% in February, driven by softer food and education costs.”

“Nonetheless, a more urgent issue for the CBE will be the persistent instability in global financial markets.” “If risk-off sentiment deteriorates in the upcoming weeks, it heightens the likelihood of CBE staying on hold,” Kadiyala stated.

Inflation has been on a downward trajectory since it reached an unprecedented high of 38% in September 2023.

In February 2024, Egypt’s economy received a significant boost from a $24 billion real estate investment on the Mediterranean coast by Abu Dhabi, followed by a $8 billion financial support package signed with the International Monetary Fund on March 6, 2024.

“There is a question regarding whether the central bank will adopt a more cautious approach moving forward, considering the external backdrop, and refrain from cutting rates to the levels we anticipate,” stated Farouk Soussa of Goldman Sachs.

“For the time being, we are maintaining our projection of more than 1,100 basis points in cuts over the upcoming nine months.”

The government statistics agency CAPMAS is set to unveil inflation figures on Thursday morning.