Egypt’s monthly core inflation, computed by the Central Bank of Egypt, dropped to 1.3% in December 2023, compared to 2.6% in the same month of the previous year and 1.0% in November 2023. As a result, the annual core inflation rate declined to 34.2% in December 2023, compared to 35.9% in November 2023.
Moreover, the annual urban inflation continued its downward trend for the third consecutive month, registering 33.7% in December 2023, compared to 34.6% in November. The Central Agency for Public Mobilization and Statistics (CAPMAS) stated in a Wednesday release that the overall Consumer Price Index for the whole country reached 194.2 points in December 2023, indicating an annual inflation rate of 35.2%, down from 36.4% in November 2023.
The agency attributed this decline to a decrease in meat and poultry prices by 1.7%, while prices for grains and bread increased by 4.5%. Dairy, cheese, and egg prices rose by 1.7%, oils and fats by 2.8%, fruits by 4.0%, vegetables by 5.3%, sugar and sugary foods by 2.0%, coffee, tea, and cocoa by 1.6%, and mineral water, soft drinks, and natural juices by 1.1%.
Additionally, fabric prices increased by 2.7%, ready-made clothing by 2.0%, furniture, furnishings, carpets, and other floor coverings by 1.4%, household linens by 2.9%, household appliances by 2.3%, and glassware, tableware, and household utensils by 2.3%.
Prices for hospital services increased by 3.0%, vehicle purchases by 2.3%, audiovisual equipment, cameras, and information processing equipment by 2.3%, ready-made meals by 2.6%, hotel services by 1.4%, and personal luggage by 3.4%.
According to the agency, the monthly inflation rate for the entire Republic was 1.2% in December 2023, compared to 0.9% in November 2023.
A document prepared by the Information and Decision Support Center of the Cabinet revealed that the monetary policy of the Central Bank of Egypt will focus on achieving price stability and reducing inflation rates to targeted levels. The policy aims for an average inflation rate of 7% (± 2%) in the fourth quarter of 2024, decreasing further to 5% (± 2%) on average in the fourth quarter of 2026. The goal is to maintain it at low levels not exceeding 5% by 2030.
The document anticipated a gradual easing of inflationary pressures facing the Egyptian economy starting in 2024, with an average inflation rate of around 9.2% during the period 2024-2028. It emphasized the need to control the expansion of monetary supply and link it to the increase in real GDP growth rates to contain inflationary pressures driven by an increase in money supply beyond economic growth rates.
The Monetary Policy Committee (MPC) of the Central Bank of Egypt, in its final meeting of 2023 held in late December, decided to maintain the key interest rates for the third consecutive time at 19.25% for deposits, 20.25% for lending, and 19.75% for credit, discount, and the main operation of the central bank. This follows a previous increase of 11% over the years 2022 and 2023.
The committee reiterated that the path of key interest rates depends on expected inflation rates rather than prevailing inflation rates. The Central Bank of Egypt aims to bring inflation to 7% ± 2% on average in the fourth quarter of 2024 and 5% ± 2% on average in the fourth quarter of 2026.
The MPC affirmed its commitment to closely monitoring economic developments and evaluating risks surrounding inflation expectations. The committee emphasized its readiness to use all available monetary policy tools to maintain tight monetary conditions and reduce monthly inflation rates, aiming to guide future trends of annual inflation rates towards the central bank’s announced targets for medium-term price stability.
