Egypt's headline inflation almost halves in February

Egypt's annual urban consumer price inflation plunged to 12.8% in February from 24.0% in January, decelerating even faster than analysts had expected, official data showed on Monday.

The drop was amplified by a statistical base effect, as exceptionally fast price increases of the past two years were no longer reflected in the statistics, analysts said.

Fifteen analysts polled by Reuters last week had expected inflation to cool to a median 14.5%.

Month on month, prices were 1.4% higher in February than in January.

Food and beverage prices were up by an annual 3.7% after rising 0.2% from January.

Core inflation also plunged more than expected to 10% on year-on-year basis in February, from 22.6% in January, the central bank said.

Inflation climbed following the Russian invasion of Ukraine in early 2022, which prompted foreign investors to withdraw billions of dollars from Egyptian treasury markets. Headline inflation reached a record high of 38.0% in September 2023.

The price rises were fuelled in part by rapid growth in the money supply. M2 money supply expanded by an all-time high of 32.1% in the year to end-January, central bank data showed.

Egypt devalued its currency a year ago, raised interest rates by 600 basis points and signed an $8bn (R146.06bn) financial support package with the International Monetary Fund, helping to bring its finances under control.