Egypt inflation accelerates to 12.5% in October after fuel price hike; CBE trims rates
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Egypt’s annual urban inflation quickened to 12.5% in October from 11.7% in September as higher fuel prices fed through to consumer costs, even as the Central Bank of Egypt cut policy rates by 100 basis points to support a disinflation trend and policy consistency.
The Central Agency for Public Mobilization and Statistics reported annual urban inflation at 12.5% in October 2025, up from 11.7% in September, following a 10.5–12.9% increase in administered petroleum product prices during the month.
Core CPI compiled by the central bank rose 2.0% month-on-month in October, versus 1.5% in September and 1.3% a year earlier. Annual core inflation increased to 12.1% from 11.3%.
Nationwide annual inflation eased to 10.1% in October from 10.3% in September. The all-country CPI reached 264.3 points, up 1.3% month-on-month.
CAPMAS cited broad-based gains led by food, clothing, housing, and utilities. Prices rose for grains and bread, meat and poultry, dairy, oils and fats, vegetables, sugar and confectionery, beverages, tobacco, textiles, ready-made clothing, footwear, rent, and household maintenance.
Offsetting moves included declines in fish and seafood (-0.3%), fruit (-10.6%), and small decreases in audio-visual equipment, computers, and hotel services.
The central bank projects average annual headline inflation to ease to 14.0% in 2025 and 10.5% in 2026, from 28.3% in 2024, converging toward 7% (±2%) by Q4 2026 and 5% (±2%) by Q4 2028.
In October, the Monetary Policy Committee cut rates by 100 basis points, setting the deposit rate at 21.0%, the lending rate at 22.0%, and the main operation and discount rates at 21.5%. Policymakers cited anchoring inflation expectations while flagging upside risks from administrative price changes and regional geopolitical tensions.
The October fuel adjustment is feeding into headline and core metrics, with the 2.0% monthly core print signaling persistent underlying pressures. Nonetheless, the wide gap between policy rates and current inflation implies positive ex-ante real rates, supporting disinflation.
For fixed income, elevated nominal yields and positive real rates sustain the appeal of local-currency instruments, though rate-cut pacing will hinge on monthly inflation momentum and further administered price moves.
For corporates, higher energy and transport costs may compress margins in consumer-facing sectors, while banks could see near-term support to net interest income at high nominal rates. Cost pass-through and demand elasticity will shape revenue resilience in retail and staples.
For FX and external balances, lower projected inflation reduces the risk of real exchange-rate misalignment over the medium term, but near-term shocks from energy pricing and geopolitics remain watch points.
If the projected glidepath materializes, scope exists for gradual easing into 2026, contingent on sustained monthly disinflation and contained second-round effects from fuel and administered prices.
Inflation re-accelerated in October on fuel price reforms, but policy remains oriented toward a medium-term disinflation path with positive real rates and cautious easing; the balance of risks will be determined by further administrative adjustments and regional geopolitical developments.
