Egypt’s annual headline inflation moderated to 10.1 percent in January 2026, down from 10.3 percent in December 2025, according to data released by the Central Agency for Public Mobilization and Statistics (CAPMAS) on Tuesday. The trend reflects continued easing in price pressures, even as monthly food costs nudged upward.
On a monthly basis, the headline inflation index rose to 268.1 points in January, a 1.5 percent increase from 264.2 points in December. CAPMAS attributed the increase primarily to food and beverage prices, which climbed 2.7 percent. Specific contributors included grains and bread (up 0.1 percent), meat and poultry (up 5.1 percent), fish and seafood (up 1.7 percent), and dairy, cheese, and eggs (up 0.5 percent). Conversely, the prices of fruit fell 2.5 percent, while home appliances declined 0.4 percent, partially offsetting overall inflationary pressures.
Annually, food and beverage prices rose 1.5 percent, reflecting increases in grains and bread (2.8 percent) and fish and seafood (6.4 percent), while meat and poultry prices decreased by 4 percent. CAPMAS noted that dairy products, cheese, and eggs saw a marginal annual increase of 0.1 percent.
The Central Bank of Egypt (CBE) has forecast further declines in inflation throughout 2026, moving toward its medium-term target of 7 percent ±2 percentage points by Q4 2026. In December 2025, the CBE cut key interest rates by 100 basis points, citing easing inflationary pressures and an improved economic outlook. This followed a 6-percent interest rate hike in March 2024 aimed at containing high inflation, stabilizing the Egyptian pound in parallel markets, and bolstering foreign currency liquidity.
The International Monetary Fund (IMF) predicted in October 2025 that Egypt’s inflation would fall sharply to 11.8 percent in fiscal year 2025/26, down from 20.4 percent in FY2024/25, underscoring the impact of sustained monetary tightening combined with gradual easing. IMF officials have praised Egypt’s cautious approach, noting that measured policy adjustments are helping to support disinflation without destabilizing growth.
Egypt’s fiscal and monetary strategies are closely tied to its agreements with the IMF, including the US$8 billion Extended Fund Facility (EFF) and the US$1.3 billion Resilience and Sustainability Facility (RSF). A staff-level agreement in December 2025 set the stage for review discussions in the first quarter of 2026. Once completed, Egypt is expected to receive a US$2.3 billion financing tranche, including US$300 million under the RSF, further supporting fiscal stability and investor confidence.
Economists note that while January’s month-on-month increases in select food items show the economy remains sensitive to commodity prices, the overall trend indicates a steady moderation in inflation. “Egypt’s disinflation path is encouraging for households and businesses alike,” said a local economist. “Continued easing will help maintain purchasing power while supporting investment and economic recovery.”
As Egypt moves into 2026, policy watchers will closely monitor both inflation data and central bank responses, with the twin goals of ensuring price stability and meeting IMF program objectives. If trends hold, consumers may see gradual relief in living costs, while investor confidence could be bolstered by the combination of predictable monetary policy and external financing inflows.
Background to Egypt’s inflation
Egypt has historically faced periods of high inflation, often influenced by currency fluctuations, subsidies reforms, food and fuel price changes, and external economic shocks. Inflation surged after the 2016 currency flotation, reaching rates above 30%, as the Egyptian pound was allowed to float freely against the US dollar. Over the past few years, inflation has gradually moderated due to tighter monetary policies, subsidy rationalization, and fiscal reforms supported by the IMF’s Extended Fund Facility (EFF).
Key drivers of recent inflation include food prices, energy costs, and exchange rate pressures. The Central Bank of Egypt has employed interest rate adjustments and liquidity management to contain price pressures, while ongoing reforms in energy subsidies and fiscal management aim to stabilize the economy. By 2026, inflation has eased to around 10% annually, reflecting both disinflationary trends and gradual economic recovery.
