CBE expects Egypt’s annual inflation to average 10.5% in 2026

Updated 11/2/2025 8:10:00 AM

Arab Finance: Egypt’s annual headline inflation is expected to average 14% and 10.5% in 2025 and 2026, respectively, the Central Bank of Egypt (CBE) highlighted in its Monetary Policy Report for Q3 2025.

The projections were compared to 28.3% in 2024. The inflation is anticipated to continue falling until it hits the CBE target of 7% on average in the fourth quarter (Q4) of 2026.

Meanwhile, the report indicated that the disinflation trend remains susceptible to domestic and global upside risks, including a higher-than-expected pass-through of fiscal consolidation measures and re-escalation of geopolitical tensions.

Touching upon the real gross domestic product (GDP) growth, the CBE projected an average acceleration to 4.8% and 5.1% in fiscal year (FY) 2025/2026 and FY 2026/2027, respectively.

The forecast is mainly driven by stronger performance across key sectors, including extractions, manufacturing, and services. Growth in key sectors is expected to be backed by the anticipated progress in monetary easing, which will further boost real private sector credit growth going forward.

The forecasted pick-up in growth also factors in a partial recovery in Suez Canal economic business, assuming a gradual normalization of maritime transport in the Red Sea following the recent armistice in Gaza.

In this regard, the output gap is expected to narrow over the forecast horizon, with output levels approaching potential by the end of FY2025/2026.

BMI recently revised Egypt’s GDP growth forecast for FY2025/2026 at 5%, compared to 4.7% previously projected in August, Enterprise News cited Ramona Moubarak, Head of MENA Country Risk at Fitch Solutions.

Similarly, the International Monetary Fund (IMF) hiked its forecast for Egypt’s GDP growth in FY2025/26 to 4.5%, instead of its July estimate of 4.1%.

The World Bank also expects the GDP to reach 4.3% in the current FY, up 0.1% points from its previous forecast.