Egypt's inflation slows to 35.8% in October after four months of record price rises

The fall defies analysts' expectations

Shops in Cairo. Inflation in Egypt had accelerated every month since June, when it hit 35.7 per cent. AFP

Egypt’s annual headline inflation slowed to 35.8 per cent in October, dropping from a record high of 38 per cent the previous month, according to data issued by the country’s statistics agency Capmas on Saturday.

Inflation had been on a steady increase since June, when it hit 35.7 per cent, and reached its fourth consecutive high in September.

The country’s monthly inflation rate also slowed to 1 per cent in October from 2 per cent in September, Capmas data showed.

The drop in October inflation was more than anticipated by analysts, according to a Saturday report from Reuters, which cited a poll it conducted with 19 analysts.

The median forecast had expected inflation to fall marginally to 37.1 per cent.

Egypt, the most populous Arab country and one of the biggest wheat importers globally, has faced economic challenges since Russia invaded Ukraine in February 2022.

It has devalued its currency three times since March 2022 and the pound has lost more than half its value since then.

The Arab world's third-largest economy has been facing a dollar crunch and mounting foreign debt.

In October, Egypt's banks announced a suspension of all debit card transactions in foreign currency until further notice, following instructions from the central bank in a bid to curb foreign exchange spending.

Earlier this month, Fitch Ratings downgraded Egypt's credit score for the second time in 2023, citing rising financial risks as progress on fiscal reforms have remained slow.

In May, the agency had revised Egypt's outlook to negative and given the country its first downgrade since 2013.

Last month, S&P Global Ratings also downgraded Egypt's rating further into negative territory, citing the slow progress being made on monetary and structural reforms.