According to official data released on Monday, Egypt’s annual consumer inflation rate fell to 12.5% in February as the most populous country in the Arab world recovers from its most severe economic crisis to date.
Although Egypt’s inflation rate has been steadily declining for months, analysts say the dramatic decline from 23.2 per cent in January—which was reported by the state statistics agency—is mostly the result of a base effect.
Wael el-Nahas, an economist and capital market expert, told AFP that when inflation reached 36%, “it looks lower because we are comparing it to last year’s extreme price jumps.”
The monthly consumer inflation rate in February was 1.4 per cent, which was marginally less than the 1.6 per cent rate in January, according to the government’s Central Agency for Public Mobilisation and Statistics.
The Egyptian economy, which depends heavily on imports, experienced a parallel market crisis early last year due to a crippling lack of foreign currency, which caused consumer goods prices in major cities to rise daily.
Cairo appeared to be beginning to recover from the crisis following its most recent currency devaluation in March 2024, thanks to a bailout of more than $50 billion in loans and investment agreements from the World Bank, the United Arab Emirates, and the International Monetary Fund (IMF).
The value of the Egyptian pound has dropped by more than 60% since February 2022, and in August 2023, inflation reached a high of around 40%.
Authorities have announced several reforms, including three increases in fuel prices last year, under an IMF agreement that was increased from $3 billion to $8 billion.
The IMF board is expected to approve a $1.2 billion tranche at its fourth review of the programme later on Monday.
Analysts think the new proposed loan agreement, which the Washington-based lender revealed last month, will be worth somewhat more than $1 billion.
