Headline inflation drops to 31.2% in January as inflation continues to slow

Cairo – February 8, 2024: Egypt's headline inflation fell to 31.2 percent in January from December’s 35.2 percent, after reaching a historic high of 38 percent in September, according to the Central Agency for Public Mobilization and Statistics (CAPMAS) on Thursday.

Annual urban consumer price inflation (CPI) fell to 29.8 percent in January, dropping from 33.7 percent in December, wrote CAPMAS in its monthly bulletin.

This marks the 4th consecutive month in which inflation continues to slow after reaching a peak in May 2023.

Monthly urban inflation was 1.6 percent compared to 1.4 percent in December.

CAPMAS attributed the decline to a drop in food and beverage prices, the largest single component of the inflation basket, which slid by 47.9 percent.

The annual urban inflation rate’s decline was partly due to its favorable comparison with the much higher consumer-price index a year before, according to Bloomberg.

The news outlet added that “while inflation has substantially cooled from a record 38 percent in mid-2023, its future trajectory depends on Egypt’s troubled currency, with another weakening likely fueling a new surge in costs”.

President Abdel Fattah El Sisi raised the minimum wage for state workers by 50 percent yesterday, enabling the lowest-paid employees to earn a monthly salary of LE 6,000 starting March. Some economists have stated that the increase could be a move to support the most vulnerable Egyptians for the upcoming devaluation.

Inflation may also pick up in February as Ramadan season rolls in, which usually comes with increased consumer demand, particularly on food and beverages, as Egyptians stockpile goods ahead of the holy month.