Egypt's annual consumer inflation rate dropped to 12.5% in February, official figures released on Monday showed, as the Arab world's most populous nation begins to emerge from its worst-ever economic crisis.
While inflation has been easing for months, experts say the sharp drop from 23.2% in January, according to the state statistics agency, is largely due to a base effect.
"Inflation looks lower because we are comparing it to last year's extreme price jumps," when inflation hit 36%, economist and capital market specialist Wael el-Nahas told AFP.
The government's Central Agency for Public Mobilisation and Statistics said the monthly consumer inflation rate edged down to 1.4% in February, slightly lower than the 1.6% recorded in January.
Foreign currency shortage
Early last year, a crippling shortage of foreign currency created a parallel market crisis in the import-dependent Egyptian economy, with prices for consumer goods rising by the day in major cities.
After its latest currency devaluation in March 2024, Cairo seemed to begin emerging from the crisis with a bailout of over $50 billion in loans and investment deals from the International Monetary Fund (IMF), the World Bank and the United Arab Emirates.
But Egyptians have yet to feel any relief, with prices still rising.
"People are still seeing their purchasing power diminish. The pace of price hikes has slowed, but the pressure on households remains," Timothy Kaldas, deputy director of the Tahrir Institute for Middle East Policy, told AFP.
Egyptian currency loses over 60% of its value
Since February 2022, the Egyptian pound has lost over 60% of its value, while inflation peaked at nearly 40% in August 2023.
Authorities have issued a number of tough reforms to comply with an IMF deal that was expanded from $3 billion to $8 billion last year, including three fuel price hikes in 2024.
The IMF board is scheduled to meet for its fourth review of the programme later on Monday, with plans to approve a fresh $1.2 billion tranche.
Last month, the Washington-based lender announced it would also unveil a new loan agreement, estimated by analysts to be worth just north of $1 billion.
Soaring foreign debt
However, Egypt remains burdened by soaring foreign debt, which has quadrupled since 2015, reaching $155.2 billion by September 2024. Much of the debt is tied to large-scale infrastructure projects, including a new capital east of Cairo.
Meanwhile, the war in Gaza has deepened economic woes.
Attacks on Red Sea shipping lanes by Yemen's Huthi rebels – who say they are targeting global trade in solidarity with Palestinians in Gaza – have severely hit the Suez Canal, one of Egypt's key sources of foreign currency.
Revenue from the waterway plunged by over 70% last year, according to official figures.
