Egypt’s Inflation Drops to Two-Year Low as Currency Crisis Eases

TLDR
- Egypt’s inflation rate fell sharply to 12.8% in February, down from 24% in January
- This comes as the impact of the foreign-currency shortage and black-market dollar speculation diminished
- The decline marks the lowest inflation rate since March 2022, when Egypt entered a financial crisis
Egypt’s inflation rate fell sharply to 12.8% in February, down from 24% in January, as the impact of the foreign-currency shortage and black-market dollar speculation diminished, the state statistics agency CAPMAS reported Monday.
The decline marks the lowest inflation rate since March 2022, when Egypt entered a financial crisis. Inflation had peaked at 38% in September 2023 before gradually easing. Analysts had forecast a drop to 14.5%, with some expecting a monthly increase due to Ramadan-related spending.
The slowdown follows a $24 billion investment deal from Abu Dhabi in 2024 and an $8 billion IMF support package signed in March 2024, which helped stabilize Egypt’s economy. Money supply (M2) growth remained high, rising 32.1% year-on-year in January, a key factor driving past inflation spikes.
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Key Takeaways
Egypt’s currency crisis and inflation surge appear to be easing, supported by foreign investment and IMF-backed reforms. The inflation drop improves consumer purchasing power and lowers pressure on interest rates, benefiting businesses. With foreign reserves stabilizing, analysts expect inflation to continue declining but caution that seasonal spending and money supply growth could slow the pace of improvement. Core inflation, which excludes volatile items, also fell to 15.4% in February from 22.6% in January. Egypt’s economic recovery now hinges on sustaining foreign inflows and managing monetary policy to maintain stability.






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