Cairo, January 10, 2024 — Egypt’s economic landscape witnessed a significant development as the annual core inflation rate declined by 1.7 percent in December, marking a noteworthy drop from November’s figure. The Central Bank of Egypt’s (CBE) data revealed a gradual improvement in the country’s inflationary indicators.
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Annual Core Inflation Highlights
December Figures: The monthly core inflation, calculated by the CBE, reached 1.3% in December 2023, showcasing a substantial reduction from the previous year’s 2.6% and November 2023’s 1.0%. Consequently, the annual core inflation rate decreased to 34.2% in December, down from 35.9% in November.
Downward Urban Inflation Trend: Urban inflation in Egypt experienced a consistent downturn for the third consecutive month. The annual urban inflation recorded 33.7% in December 2023, indicating a reduction from November’s 34.6%. The Central Agency for Public Mobilization and Statistics (CAPMAS) reported that the overall Consumer Price Index for the country reached 194.2 points in December 2023, translating to an annual inflation rate of 35.2%, down from 36.4% in November.
Factors Influencing the Inflation Trend
The decline in inflation rates was attributed to various factors affecting different sectors of the economy:
Price Movements: The CAPMAS release outlined the impact of fluctuating prices in several key areas. While meat and poultry prices decreased by 1.7%, prices for grains and bread increased by 4.5%. Other notable changes included a rise in dairy, cheese, and egg prices by 1.7%, oils and fats by 2.8%, fruits by 4.0%, vegetables by 5.3%, sugar and sugary foods by 2.0%, and coffee, tea, and cocoa by 1.6%.
Non-Food Categories: Beyond food items, various non-food categories witnessed price adjustments. Fabric prices increased by 2.7%, ready-made clothing by 2.0%, furniture, furnishings, carpets, and other floor coverings by 1.4%, household linens by 2.9%, household appliances by 2.3%, and glassware, tableware, and household utensils by 2.3%.
Services and Goods: Essential services and goods also experienced price fluctuations. Hospital services saw a price increase of 3.0%, vehicle purchases by 2.3%, audiovisual equipment, cameras, and information processing equipment by 2.3%, ready-made meals by 2.6%, hotel services by 1.4%, and personal luggage by 3.4%.
Monetary Policy Outlook
The Information and Decision Support Center of the Cabinet outlined the monetary policy objectives of the CBE. The central focus remains on achieving price stability and reducing inflation rates to targeted levels. The policy aims for an average inflation rate of 7% (± 2%) in the fourth quarter of 2024, gradually decreasing to 5% (± 2%) on average in the fourth quarter of 2026. The long-term goal is to maintain inflation at levels not exceeding 5% by 2030.
The Monetary Policy Committee (MPC) of the CBE, in its final meeting of 2023, opted to maintain key interest rates for the third consecutive time. The committee emphasized that the path of key interest rates is determined by expected inflation rates rather than prevailing inflation rates. The CBE aims to achieve an average inflation rate of 7% (± 2%) in the fourth quarter of 2024 and 5% (± 2%) on average in the fourth quarter of 2026.
Economic Challenges In Egypt and Outlook
Egypt continues to grapple with economic challenges, including high inflation, a shortage of foreign currency, and substantial borrowing levels. The government has implemented measures such as import restrictions and currency devaluation to address these issues. The persistence of these challenges raises concerns about the overall economic outlook, and stakeholders closely monitor developments to adapt strategies accordingly.
As Egypt navigates its economic landscape, policymakers, businesses, and citizens remain vigilant, seeking sustainable solutions to stabilize key economic indicators and foster long-term growth.
