Egypt: Consumer Price Growth Slows Down
Foreign investors, attracted by very high yields, buy $935 million worth of Egyptian treasury bonds
The consumer price inflation rate in Egypt’s urban areas fell from 26.5%, recorded in October 2024, to 25.5% in November, the lowest level ever registered since December 2022. As announced by the Egyptian statistical agency CAPMAS, the annual inflation rate has also decreased from 26.3% (November 2023) to 25% in November this year (graph below).
According to Egyptian newspapers, inflation began rising sharply in early 2022 after the conflict between Russia and Ukraine began, raising serious concerns about the food security of the North African country, one of the largest importers of Russian grain. In September 2023, inflation in Egyptian cities reached a record high of 38%.
Foreign investors who withdrew billions of dollars from Egyptian securities between 2022 and 2023 are returning to Egypt’s financial market: the Egyptian Stock Exchange reported that “foreign investors purchased approximately 47.4 billion Egyptian pounds (approximately $935 million) worth of three-year Egyptian treasury bonds in the secondary market.” According to Al-Sharq newspaper, foreign investors received a yield of 26.24% on the securities, about 2% higher than the interest rate of 24.21% of the Egyptian Central Bank’s latest offer.
The surge in investment in Egyptian government bonds followed the Central Bank of Egypt’s Monetary Policy Committee’s decision to “keep interest rates at record high levels” for the fifth consecutive time, with the overnight deposit rate currently set at 27.25 percent and the overnight lending rate at 28.25 percent.
