Inflation Eases in Egypt: A Financial Relief

Egypt's annual urban consumer price inflation has slowed to 12% in August, down from 13.9% in July, according to data released by the state-run statistics agency CAPMAS. This figure fell short of the median prediction from a Reuters poll, which anticipated an easing to 12.7%.

The inflation decrease aligns with a two-year trend of monetary tightening by the government. Notably, annual inflation has significantly decreased from a record high of 38% in September 2023. This decline was aided by an $8 billion financial aid package from the International Monetary Fund in March 2024.

The relief in inflation rates led the Central Bank of Egypt to cut its overnight lending rate by 200 basis points on August 28. This marks the third rate reduction this year, indicating a shift in economic strategy by the bank to foster growth and stability.