Annual inflation rate deaccelerates to 25.2% in July: CAPMAS

Cairo – August 8, 2024: Egypt’s annual inflation rate decelerated to 25.2 percent in July 2024 from 27.1 percent in June, with annual urban inflation slowing to 25.7 percent in July from June’s 27.5 percent, according to the latest data from the Central Agency for Public Mobilization and Statistics (CAPMAS) released on Thursday.

The country’s rapid decline in inflation rates defied most analysts’ forecasts, the statistics agency highlighted.

The Consumer Price Index (CPI) for the total urban areas of Egypt stood at 226.7 points in July, indicating a 0.5 percent inflation compared to a higher 1.8 percent in June 2024.

Driving Inflation Down

The largest component of the inflation basket, food and beverage prices, reported a 28.6 percent increase on an annual basis in July, climbing 0.6 percent monthly.

Monthly food and beverage prices were up due to significant price increases: vegetables rose by 19.3 percent, fruits by 3.7 percent, dairy products by 1.8 percent, and mineral water, soft drinks, and natural juices by 2.0 percent.

Prices that saw a decline included oils and fats which was down by 0.8 percent, grains and bread by 1.4 percent, sugar and sugary products by 2.0 percent, and meats and poultry by 5.7 percent.

Ready-made clothing prices decreased by 0.3 percent annually, while they increased by 0.2 percent monthly.

This was primarily due to higher costs in other clothing and accessories, which rose by 3.1 percent, clothing cleaning, repair, and rental by 1.2 percent, shoes by 1.5 percent, and shoe repairs, which rose by 2.3 percent. However, prices decreased for fabrics, down by 0.4 percent, and ready-made clothing by 0.3 percent.

Housing, water, electricity, gas, and fuel prices were up by 0.4 percent monthly, driven mainly by higher rental costs of 0.6 percent, water and related housing services by 0.3 percent, and electricity, gas, and other fuel materials, which rose by 0.1 percent.

Household maintenance and furniture prices jumped by 1.2 percent in July, influenced by higher costs in household furnishings, which rose by 0.5 percent, household appliances by 1.6 percent, glassware, tableware, and household utensils by 0.7 percent, household and garden tools and equipment by 1.7 percent, and goods and services used in home maintenance, which rose by 1.2 percent.

Transportation prices were up by 1.1 percent, primarily due to higher costs in vehicle purchases, which rose by 1.1 percent, private transport by 0.3 percent, and transport services by 1.5 percent.

Prices climbed last month following the government’s reduction of fuel subsidies as part of its plan to decrease public spending.

Minister of Finance, Ahmed Kouchouk, shared that Egypt has narrowed its public spending by 2.2 percent of its gross domestic product (GDP) during the last fiscal year, bringing the budget deficit down to 3.6 percent and recording a primary surplus of 6.1 percent.

As part of the government’s efforts, Egypt raised the prices of certain subsidized products in the past few months, including increasing the prices of subsidized bread by 300 percent in June – the first in almost three decades - and upping fuel prices by up to 15 percent in July.

The country’s cutting of subsidies is expected to increase inflation to around 30 percent in 2024 and 18-20 percent in 2025, according to a June report by Fitch Solutions.