Egypt’s inflation rate decelerated to its slowest pace in a year and a half, despite significant currency devaluation and a historic increase in subsidized bread prices, according to a press release by the country’s central bank (CBE).
The country’s core inflation rate – which measures consumer prices in several essential goods and services – reached 27.1 percent in May, compared to 31.8 percent in April.
“Monthly urban headline CPI inflation recorded negative 0.7 percent in May 2024 compared with 2.7 percent [in April],” the CBE highlighted that is the lowest inflation rate since June 2019.
Food and beverage prices, the largest component of the basket of goods and services used to calculate core inflation, increased by 31.0 percent year-over-year in May – a 9.5 percent decrease compared to 40.5 percent in April.
Annual consumer price inflation in urban areas also fell in May, reaching 28.1 percent compared 32.5 percent a month ago.
The reduction in inflation comes as a surprise, given the Egyptian pound’s nearly 40 percent plunge against the dollar. Previous devaluations triggered further inflation rather than improvements.
Egypt’s government handled the devaluation by injecting billions of dollars into foreign reserves through expanded loan deals with multilateral organizations and the mega sale of Ras El-Hikma to the United Arab Emirates.
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