Egypt's inflation climbs for a second month on higher food costs

Health care, transportation and communications spike 34% annually

The cost of fruit in Egypt soared by 62 per cent in April, pushing up food prices. Bloomberg

Egypt's inflation inched up in April, the second consecutive month it has posted an increase, driven by a rise in food and beverages and a cut in fuel subsidies required under an International Monetary Fund programme.

Inflation in the Arab world's most populous country rose to 13.9 per cent last month, compared to 13.6 per cent in March, Egypt's Capmas statistics bureau said on Saturday.

That is significantly down from April last year, when inflation was at 32.5 per cent. Egypt's inflation peaked at 38 per cent in September 2023.

On a monthly basis, inflation slowed to 1.3 per cent from 1.6 per cent.

Food and beverages – the biggest component of the consumer price index – recorded an increase of 6.2 per cent and were the “most important reasons” for the rise, Capmas said.

This was particularly driven by the higher cost of fruit, which shot up 62 per cent, it added.

Health care, and transport and communications logged the biggest increases both on an annual and monthly basis. Compared to April 2024, they soared 34.5 per cent and 33.7 per cent, respectively.

The second monthly increase in inflation follows a period of relative stability in February, when inflation dropped sharply to 12.8 per cent, its lowest level since March 2022, from 23.2 per cent in January.

Egypt's economy has faced several challenges over the past few years, grappling with rising inflation, foreign exchange shortages and elevated debt levels.

The country has been stabilising, aided by an $8 billion IMF loan package expected to boost the country's flagging economy, which has also been affected by the Israel-Gaza war.

The IMF in March completed the fourth review of Egypt's $8 billion Extended Fund Facility loan, allowing the country to immediately draw about $1.2 billion – bringing total disbursements under the programme, approved in December 2022, to about $3.2 billion.

Egypt’s Prime Minister Mostafa Madbouly said that, under the IMF programme, more subsidy cuts on fuel, bread, diesel, electricity and water would be implemented in the new fiscal year. He also confirmed that a round of salary increases would also come into effect.

Egypt announced significant fuel price increases in April, with rates rising between 11.7 per cent and 33.3 per cent in different categories.

The country's credit rating has also improved, with S&P Global and Fitch last year upgrading its long-term ratings.

In 2024 the World Bank also committed to providing Egypt with $6 billion in financing over the next three years.

Last month the Egyptian government unveiled its 2025-2026 national budget, which projects record spending and revenue levels while relying heavily on continued borrowing and subsidy reductions to meet its commitments.

Economists have warned that tariffs imposed by the US could raise import prices for Egypt, which in turn might cause another inflation headache.