Egypt's Economic Landscape: Inflation Rises as IMF Reviews Progress

Cairo - Egypt's economy continues to navigate a complex mix of challenges and reforms as December 2025 unfolds, with rising inflation rates coinciding with renewed international oversight and currency fluctuations.
Inflation Climbs to Seven-Month High
Egypt's annual urban inflation accelerated to 12.5% in October 2025, up from 11.7% the previous month, marking the highest rate since July. The uptick was primarily driven by substantial fuel price increases of nearly 13% implemented on October 17, alongside a new rent law that has pushed housing costs higher.
Monthly consumer prices rose 1.8% in October, reflecting the immediate impact of these policy changes. Food inflation edged up modestly to 1.5% from 1.4%, suggesting relatively stable grocery costs despite broader price pressures.
Economic forecasts project inflation could reach 14% by the end of the current quarter before gradually declining to approximately 10.5% throughout 2026 as the effects of recent adjustments work through the system.
Egyptian Pound Under Pressure
The Egyptian pound has experienced modest depreciation against the US dollar in recent weeks. The exchange rate stood at approximately 47.51-47.55 EGP per USD as of early December, representing a 0.66% decline over the past month. However, the currency has shown resilience over the longer term, appreciating 4.41% over the past year.
Foreign exchange markets remain relatively stable, with parallel market rates trading within a narrow band of 47.49-47.64 EGP per dollar. Egypt's foreign currency reserves continue to provide a buffer for the pound, though regional tensions affecting Suez Canal revenues have created some headwinds.
IMF Reviews Underway
Prime Minister Mostafa Madbouly confirmed this week that the International Monetary Fund has commenced its fifth and sixth reviews of Egypt's economic performance under the country's Extended Fund Facility program. The 46-month arrangement, valued at $8 billion, aims to strengthen macroeconomic stability, reduce inflation, and support private sector growth.
The reviews, which follow a successful fourth assessment in March 2025 that released $1.2 billion in funding, are expected to unlock an additional $820 million if Egypt demonstrates continued progress on structural reforms. The government remains focused on attracting foreign investment and implementing policy changes despite regional challenges, including a 70% drop in Suez Canal revenues due to ongoing tensions.
Looking Ahead
Egyptian officials project economic growth could reach 4.3% in 2025, supported by ongoing reforms and government initiatives. However, persistent inflationary pressures, regional security concerns, and the need to balance fiscal discipline with social spending continue to present challenges for policymakers.
The coming months will prove critical as Egypt works to demonstrate its commitment to economic transformation while managing the immediate pressures facing households and businesses across the nation.