Egypt's headline inflation quickened in May for the first time since March, with annual urban consumer price growth rising to 14.6% from 14.9% in April. This acceleration was primarily due to a significant increase in food and beverage prices, which constitute the largest component of the inflation basket. The monthly inflation rate saw an increase to 1.6% in May, up from 1.1% in April, according to data released by the state statistics agency CAPMAS.
This uptick follows two consecutive months of slowing inflation in April and May, despite persistent pressures from the Iran war and its impact on global energy prices and the local currency. In March, inflation had reached 15.2%, its highest level since the previous May, before an unexpected slowdown to 14.9% in April. February's inflation stood at 13.4%, up from 11.9% in January, even before the full effects of the Iran war were felt.
The increase in inflation in May, particularly driven by food costs, highlights the ongoing challenges for the import-reliant Egyptian economy. Although inflation had shown signs of moderating in the preceding months, the latest data suggests that underlying price pressures remain, potentially complicating the central bank's monetary policy decisions, especially regarding interest rates.
