Egypt Inflation Eases Slightly in August, while Core Inflation Continues to Rise
Egypt’s inflation eased slightly to 12.7% in August, but we expect price pressures to remain elevated through Q4 as higher energy costs, ongoing regional conflict and a weaker pound continue to weigh on the inflation outlook. We believe annual CPI will stand at 13.7% in 2026.
Bottom Line Up Front (BLUF): Egypt’s inflation eased slightly to 12.7% in August, but we expect price pressures to remain elevated through Q4 as higher energy costs, ongoing regional conflict and a weaker pound continue to weigh on the inflation outlook. While the pound has stabilized from its earlier lows USD/Pound hitting close to 55 in April, core inflation surging remains a major concern. We believe annual CPI will stand at 13.7% in 2026.
Figure 1: CPI, Core Inflation (YoY, % Change) and Policy Rate (%), September 2024 – August 2026
Source: IslamicMacro
CAPMAS released Egypt’s August inflation figures on September 10. CPI eased slightly to 12.7% y/y, down from 13.0% in July, while consumer prices were broadly unchanged on a monthly basis.
Housing, water, electricity, gas and other fuels remained the biggest source of price pressure, rising 33.0% year-on-year. Transport costs increased by 21.7%, while education prices were up 20.0%. Food and beverage prices rose more moderately, increasing 6.5% from a year earlier.
On a monthly basis, food and beverage prices fell 1.2%, helped by a 7.0% decline in vegetable prices and a 1.5% drop in meat and poultry prices. These declines largely offset higher housing-related costs, which increased 1.9%, including a 4.3% rise in electricity, gas and fuel prices.
After the announcement of the print, we continue to anticipate inflation will stay high in Q4 2026 due to energy price hikes and currency depreciation. The regulator reaffirmed its commitment to keeping a highly defensive, tight baseline to gradually push the numbers back down toward its 7.0% target, but this will take time as long as the Iran conflict resumes.
Alongside the ongoing conflict with Iran that has sent energy prices climbing, the Egyptian pound’s 6.5% y/y decline against the dollar has continued to compound structural vulnerabilities, driving the underlying momentum for core inflation through August. (Note: Even with risks, the Egyptian Pound has found its footing and recovered nicely from earlier lows after mid-July).
Under current circumstances, we assess the inflation rate will remain on the upside due to continued conflict in Iran, hikes in energy prices and recent fluctuations in the Pound. While the pound has moderately stabilized from its earlier lows USD/Pound hitting close to 55 in April, core inflation surging remains a major concern. We believe annual CPI will stand at 13.7% in 2026.
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Analyst / Author Declaration: I, Volkan Sezgin, Independent Analyst and Researcher, declare that the views and conclusions expressed in this publication reflect my professional judgment at the time of publication and are presented in good faith. The analysis has been prepared independently and without improper influence or inducement. Where applicable, material conflicts of interest are disclosed. I observe applicable professional and internal compliance standards concerning confidentiality, independence and the responsible use of information.