Egypt’s annual urban headline inflation rate declined for the fifth consecutive month in July 2024, reaching 25.7%, according to the Central Bank of Egypt (CBE). This marks a decrease from 27.5% in June 2024.

The CBE attributed the continued decline to favourable base effects from the strong inflationary pressures seen in 2023, as well as a decline in both food and non-food inflation.

Annual food inflation fell to 29.7% in July 2024, down from 31.9% in June 2024. The CBE attributed this decline primarily to a decrease in core food prices. Non-food inflation also decelerated, reaching 22.9% in July 2024, compared to 24.5% in June 2024.

Annual core inflation also saw a decline, reaching 24.4% in July 2024 from 26.6% in June 2024, marking its lowest level since December 2022. This consistent decline over five months is reflected in monthly core inflation, which recorded a negative 0.5% in July 2024 compared to 1.3% in the same month of 2023.

Monthly urban headline inflation recorded 0.4% in July 2024, compared with 1.9% in the same month of 2023 and 1.6% in June 2024. The higher prices of volatile food items were partially offset by a decline in core food prices.

Annual rural headline inflation also declined to 24.7% in July 2024 from 26.6% in June 2024. Additionally, annual nationwide headline inflation declined to 25.2% in July 2024 from 27.1% in June 2024.

A closer look at the components of monthly headline inflation reveals that prices of fresh fruits increased by 2.2% while prices of fresh vegetables increased by 18.9%, contributing 0.71 percentage points to monthly headline inflation.

Prices of poultry, on the other hand, decreased by 11.2%, contributing negative 0.71 percentage points to monthly headline inflation.

Prices of market rice declined by 1.3%, contributing negative 0.02 percentage points to monthly headline inflation. Prices of oils and fats, declining for the fifth consecutive month, decreased by 0.7% and contributed negative 0.02 percentage points to monthly headline inflation.

Prices of eggs and dairy products increased by 4.3% and 0.3%, respectively, contributing 0.09 percentage points to monthly headline inflation. Prices of fish and seafood increased by 0.8%, contributing 0.02 percentage points. Other core food items, including market sugar, pulses, and market tea, contributed 0.04 percentage points to monthly headline inflation.

Prices of retail items increased by 1.0%, contributing 0.13 percentage points to monthly headline inflation. This was mainly driven by clothing and footwear, household cleaning products, as well as personal care products.

Despite a decline in Hajj and Umrah trips, prices of services increased by 0.4%, contributing 0.10 percentage points to monthly headline inflation. The increase was mainly driven by higher expenditure on restaurants and cafes, and rents.

Prices of regulated items increased by 0.3%, contributing 0.05 percentage points to monthly headline inflation, primarily due to an increase in tobacco prices.

Monthly core inflation was affected by price increases in the aforementioned core CPI items. Core food items contributed negative 0.80 percentage points to monthly core inflation, while retail items contributed 0.18 percentage points and services 0.13 percentage points.

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