Egypt: Inflation accelerates in February from January
Latest reading: Consumer prices increased 13.4% in annual terms in February, following a 11.9% rise in the prior month. February’s reading exceeded market expectations and marked the strongest inflation rate since July 2025.
Relative to the prior month’s figures, there were higher price pressures for food and non-alcoholic beverages, the largest component in the consumer price index basket (+4.6% in annual terms vs +1.9% in January), transportation (+27.5% vs +27.4% in January) and housing and utilities (+31.7% vs +29.7% in January). Food inflation was driven primarily by seasonal price hikes in poultry and vegetables during Ramadan, while other food costs remained fairly steady.
Meanwhile, core consumer prices were up 12.7% on a year-on-year basis in February, following a 11.2% rise in the prior month.
Finally, consumer prices rose 2.80% in February on a month-on-month basis, following a 1.17% increase in the prior month.
Outlook: February data shows inflationary pressures resurfacing prior to the Iran conflict, and these pressures are expected to worsen in the coming months. The ongoing war between the U.S. and Iran has pushed global oil prices higher due to supply disruptions. At the same time, the Egyptian pound has lost significant value as investors pull their money out of the region. These dual pressures have forced Egypt to hike domestic fuel prices to curb the fiscal deficit. Persistent currency weakness and high oil costs could trigger further increases to ease the rising fiscal strain. As such, the Central Bank of Egypt is unlikely to meet its inflation target of 7% (±2 percentage points) in 2026.