Egyptian Inflation Cools for a Second Month As Rate Cuts Weighed

Egypt inflation slowed for a second month, potentially giving the North African nation scope to resume a monetary-easing cycle.

Consumer prices in urban areas grew an annual 13.9% in July versus 14.9% the month before, Egypt’s main statistics body said Sunday. On a monthly basis, there was deflation of 0.5%, versus a 0.1% contraction in June.

Food and beverage prices, the largest single component of the basket, climbed 3.4% year-on-year in July, compared with the previous month’s 6.9%.

Egypt has been on a mission to damp down inflation that surged to a record 38% in September 2023 as it revamps the economy after securing a $57bn bailout led by the United Arab Emirates and International Monetary Fund last year.

The inflationary deceleration may raise the chances of an interest-rate cut at Egypt’s next monetary policy meeting, scheduled for August 28. The central bank opted for caution with a hold in mid-July, following two rate reductions.

Egypt’s inflation-adjusted interest rate has been one of the world’s highest, encouraging foreign portfolio investors to pile into its local debt market.

Recent gains for Egypt’s pound may also help to cool prices for the import-dependent nation. The currency was trading about 48.5 to the dollar on the offshore market on Friday, according to data compiled by Bloomberg.