A Reuters poll showed that Egypt's headline inflation rate is expected to fall to 11.7% in January 2026, compared to 12.3% in December, amid a favorable base effect and lower food prices.
These expectations were based on a survey of 18 analysts, conducted during the period from January 29 to February 5, on annual consumer price inflation in urban areas.
James Swanston of Capital Economics said: “The appreciation of the Egyptian pound and the decline in inflation in the transportation and food sectors will be the main factors behind the slowdown in the inflation rate in Egypt.”
The sharp decline in the annual inflation rate comes after it reached a record high of 38% in September 2023, thanks to an $8 billion financial support package signed with the International Monetary Fund in March 2024.
Israa Ahmed from the investment firm Thunder explained: “The effect of a relatively favorable base is expected to appear in the January 2026 figure, mitigating the expected rise in the food and beverage item.”
Five analysts also expected core inflation, which excludes volatile items such as some food products and fuel, to fall to an average of 11.5%, compared to 11.8% in December.
It is noteworthy that the expansion of the money supply contributed to fueling inflation, as central bank data showed an acceleration in M2 money supply growth to 20.5% annually in December, after it was 20.14% in November, compared to its peak of 31.5% in January 2023.
The slowdown in inflation led the Central Bank of Egypt to reduce the overnight lending rate by 100 basis points to 21% in December, bringing the total reductions during 2025 to 725 basis points, while the Monetary Policy Committee is scheduled to review overnight interest rates on February 12.
