RIYADH: Egypt’s annual urban inflation slowed to a nine-month low of 12.7 percent in October, down from 13.9 percent in September, partly reflecting favourable base effects, official data showed.

The monthly urban headline consumer price index, released by the Central Agency for Public Mobilization and Statistics, rose 0.7 percent in October, compared with 1.8 percent in the same month last year and 1.3 percent in September.

The Central Bank of Egypt raised its key interest rates by 100 basis points on Oct. 29, taking the overnight deposit rate to 20 percent and the lending rate to 21 percent.

The bank said the move aimed to anchor inflation expectations and safeguard the disinflation trajectory amid challenging external conditions.

In its latest economic outlook, the central bank projected headline inflation to average 16.6 percent in fiscal year 2026/27, before easing to 8.1 percent in 2027/28.

It expects inflation to return to single digits in the second half of 2027, supported by tight monetary policy, although the outlook remains subject to regional developments and their impact on domestic prices.

“Following the CBE’s October 100-basis-point increase in the overnight deposit rate to 20.0 percent, we expect rates to remain unchanged at the December meeting and through the start of next year, with easing resuming toward mid-2027,” retail banking firm Emirates NBD said in a statement.

It added: “Our baseline remains for 400bps of cuts next year, taking the deposit rate to 16.0 percent by year-end, provided external pressures stabilise. Renewed pound weakness, higher import costs, and a potential January fuel-price hike remain the principal upside risks to inflation.”

Core inflation moderates

The data further showed that core inflation, which excludes volatile items, also moderated on an annual basis, declining to 13.1 percent in October from 14.1 percent in September, according to figures calculated by the Central Bank of Egypt.

On a monthly basis, core CPI inflation rose 1.2 percent in October, compared with 2 percent in October 2025 and 0.8 percent in September 2026.

October’s S&P Global PMI survey also pointed to persistent cost pressures, with private-sector firms raising selling prices at the fastest pace since June as input costs continued to climb.