RIYADH: Egypt’s annual urban headline inflation rate rose to 16.8 percent in May, up from 13.9 percent in April, driven primarily by continued non-food price pressures, according to official data.
Released by the Central Bank of Egypt, the analysis pointed to a renewed uptick in food prices and challenging base effects, as the same period last year saw negative inflation.
These inflation trends come as Egypt’s broader economic landscape continues to be shaped by both domestic and global pressures. The government is navigating a delicate recovery amid external shocks, ongoing structural reforms, and efforts to manage public debt. Despite signs of resilience in credit and growth, inflation remains a key concern for both policymakers and households.
This backdrop helps explain Moody’s February decision to affirm Egypt’s Caa1 long-term foreign and local currency ratings with a positive outlook, citing improved prospects for debt servicing.
It also aligns with the country’s reported real gross domestic product growth of 3.9 percent in the first half of the current fiscal year, a signal of economic resilience, according to Prime Minister Mostafa Madbouly in May.
The newly released CBE report said: “The increase was particularly influenced by rising prices of pharmaceutical products and fresh fruits. Additionally, a moderate rise in inland transportation costs contributed to overall inflation, reflecting the second-round effects of April’s fuel price hike.”
It added: “Similarly, annual core inflation accelerated to 13.1 percent in May 2025 from 10.4 percent in April 2025. This increase reflects higher monthly core inflation, registering 1.6 percent in May 2025 compared to 1.2 percent in April 2025, as well as unfavorable base effects compared to the negative 0.8 percent recorded in May 2024.”
According to the financial institution, core inflation is a version of the headline consumer price index that removes the effects of short-term price shocks, allowing for a clearer view of long-term inflation trends by focusing only on stable, ongoing price changes rather than temporary fluctuations.
The report further indicated that monthly core inflation dynamics in May were influenced by rising prices in both food and non-food categories, such as engine oil, restaurant and cafe services, local transport, and housing rents. Seasonal effects linked to Eid Al-Adha also contributed, particularly with increased costs for Hajj and Umrah, clothing, and meat.
“Monthly core inflation recorded 1.6 percent in May 2025, reflecting the impact of previously mentioned changes in core CPI items. Retail items and services contributed to monthly core inflation by 0.74 and 0.68 percentage points, respectively, while core food contributed 0.22 percentage points,” the report said.
It also revealed that monthly urban headline inflation rose to 1.9 percent in May, up from 1.3 percent in April, primarily fueled by ongoing price pressures, along with increases in volatile food prices and public services such as inland transport and health care.
“Likewise, annual rural headline inflation increased to 16.2 percent in May 2025, compared with 13.1 percent in April 2025, with annual nationwide headline inflation rising to 16.5 percent in May 2025 from 13.5 percent in April 2025,” the CBE report said.
In May, Madbouly said that the country is preparing to transition away from its current economic reform program with the International Monetary Fund, which is scheduled to conclude by late 2026 or early 2027.
He said at the time that the government is developing a long-term national economic strategy that will extend to 2030, focusing on sustaining growth without relying on international institutions, according to an official release.
The remarks come as Egypt works to stabilize an economy that has been strained by record inflation, a weakening currency, and rising debt. In recent years, the government has implemented reforms aimed at unlocking external financing, attracting Gulf-backed investments, and completing a record sale of state assets.
