Home » Egypt’s Inflation Climbs to 27-Percent Amid Rising Costs

Egypt’s Inflation Climbs to 27-Percent Amid Rising Costs

Analysts attribute inflation increase to education and fuel costs

by Adedotun Oyeniyi

KEY POINTS


  • Egypt’s inflation rate rose to 27 percent in October, driven by education and fuel costs.
  • The central bank’s monetary policy is expected to adjust in 2025 to ease inflation.
  • Continued price increases strain households as public discontent grows.

Egypt’s inflation rate surged to 27 percent in October, fueled by higher education fees and a mid-month increase in fuel prices, according to a recent survey of economic analysts.

This marks the third consecutive month of inflation increases in Egypt, a trend affecting consumers and business owners alike.

Rising costs of living drive inflation

The jump in inflation from 26.4 percent in September follows a series of domestic price hikes, especially in sectors crucial to everyday life, such as transportation and energy. 

In October, fuel costs increased by 11-17 percent, adding pressure on household budgets that are already stretched thin by rising electricity tariffs and public transportation fares. 

Education costs were another significant factor, with adjustments typically accounted for at the start of Egypt’s academic year in October.

Since March, Egypt has been implementing reforms as part of an $8 billion financial support program with the International Monetary Fund (IMF). 

The initiative aims to stabilize the economy, but it also requires Egypt to lift subsidies and make other policy adjustments that could add to the cost of living for citizens.

Currency and policy challenges

The country’s central bank has struggled to curb inflation while keeping economic growth steady. Egypt’s M2 money supply, which includes cash and liquid assets, expanded by a record 29.6 percent in September, contributing to the inflationary environment.

In an effort to stabilize the economy, the central bank raised its key lending rate to 28.25 percent, its highest level since 2022 creating a challenging environment for businesses seeking affordable credit.

According to Reuters, economists predict that inflation could ease as the central bank potentially moves towards a more relaxed monetary policy in 2025. 

James Swanston of Capital Economics noted that inflation is expected to slow in the final months of this year, allowing for possible interest rate reductions in early 2025, which could offer some relief to Egyptian consumers and businesses.

Social impact and future outlook

The continued rise in inflation has prompted many Egyptians to voice concerns about their ability to afford essential goods and services.

Public discontent over economic conditions has grown as the government attempts to balance fiscal stability with the needs of its citizens. 

With inflation expected to gradually ease, the government faces mounting pressure to find solutions that address both economic growth and the rising cost of living.

Analysts suggest that Egypt’s commitment to its IMF-backed reform agenda could provide long-term benefits but may lead to short-term challenges. 

As the government pursues structural adjustments, economists are closely watching for signs of recovery that could help mitigate the impact of inflation on daily life.

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