Egypt's Inflation Eases to Two-Year Low in December

Egypt's urban consumer price inflation rate dropped to 24.1% in December, the lowest in two years, from 25.5% in November. The decrease aligns with forecasts as Egypt's M2 money supply grew. Support from the IMF included an $8 billion package to adjust monetary policy and reduce deficit.

Egypt's annual urban consumer price inflation rate fell to 24.1% in December, marking its lowest level in two years, according to the statistics agency CAPMAS. This decline, expected after a 25.5% rate in November, matches the projections from a Reuters poll.

The inflation surge began in 2022, propelled by foreign investors withdrawing from Egyptian markets after the Russian invasion of Ukraine. It reached a record 38% in September 2023 before decreasing to December's 24.1%, a level last seen in December 2022 at 21.27%. Monthly urban prices rose slightly by 0.2%, as food prices continued to decrease.

Much of the inflationary pressure is attributed to a rise in the money supply, with Egypt's M2 money supply increasing by 29% in November. The country's financial strategy is bolstered by an $8 billion financial assistance agreement with the International Monetary Fund, aimed at narrowing the budget deficit and curbing inflationary trends.

(With inputs from agencies.)